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Gold smashed through the $1000 an ounce barrier today, hitting its highest level since March last year.
The precious metal surged to $1007.70 an ounce on the London Bullion Market, thanks to a triple boost from a weaker dollar, investors seeking a hedge against inflation and lingering doubts about the economic recovery.
The price of gold has risen by 14% this year and is now within sight of its record high of $1032.70 reached 18 months ago.
Speculators, including hedge funds, are hoarding the metal as a protection against rising prices.
They believe that the trillions of pounds pumped into the global economy by central banks will push up the cost of living.
Meanwhile, a decline in the dollar has made gold more appealing to investors holding rival currencies.
Other investors fear a “double-dip” recession and are turning back to gold as a safe haven for their money.
Bernard Sin, head of metals trading at bullion refiner MKS Finance, said that gold could well be on its way towards a new all-time high: “The next technical level is $1040, and at the rate it's going, it might not be difficult. There's a lot of new money coming into gold.”
The price of gold has risen for each of the last eight years.
Shares in gold miners shone in response to the price rise, with Randgold Resources up more than 3% to £43.61. Russian gold miner Peter Hambro rose 3% to 890p.
The Royal Mint doubled production of gold coins in the second quarter of the year to cope with soaring demand.
Reader views (2)
You can sell your gold Paddy. Long term gold is going to the moon. If it falls back to $950 in the short term, big deal. I believe that the days of 3 digit gold are pretty much finished.
Gold was $1600 AUD a few months back, today's prices are a bargain. The US dollar is on it's way to being toilet paper.
- Goldfever, Melbourne, 23/09/2009 08:46
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As an investor in gold stocks, I would exercise a note of caution to those who are/have decided to invest at current levels. The gold price could well be the next commodity 'bubble' waiting to catch out the unwary and unsophisticated investor. Those who have made substantial gains from gold have been invested since the beginning of the year, and at some point they will consolidate their profits by selling gold and moving back into equities particularly as the world economy improves. This will cause the price of gold to fall back sharply to around $950, leaving late investors with a tidy loss on their 'shiny' investment.
- Paddy, South London, 23/09/2009 07:46
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