Gold hits record above $1,900 on global recession fears

23rd August 2011, Comments 0 comments

Record-breaking gold topped $1,900 per ounce on Tuesday as investors sheltered from stubborn concern over a new global recession and the eurozone sovereign debt crisis, analysts said.

In early Asian trading hours, the precious metal -- which is widely regarded as a safe haven in times of economic turmoil -- rocketed as high as $1,913.50. It pulled back to $1,870 in late afternoon London deals.

"Continued fears of a global recession propelled gold prices into uncharted territory," Barclays Capital analyst Suki Cooper told AFP.

"As long as global investor interest remains robust, prices are set to venture further to new highs."

She added that there were a number of factors -- including levels of scrap supplies, weak seasonal demand and profit-taking -- that could spark brief downward price moves.

Barclays Capital forecasts that gold will average $1,725 in the third quarter and $1,875 in the fourth quarter, and $2,000 per ounce in 2012.

In recent weeks and months, gold has smashed its way past a series of historic peaks on mounting economic concerns.

"The price of gold should remain well supported in the present climate though and continue its upward trend for the time being," added Commerzbank analyst Daniel Briesemann.

"The closeness of the $2,000 mark should attract further buyers. Investment demand especially is still lending support to the price."

Demand has soared as eurozone leaders struggled to contain the widening debt crisis, which has already sunk Greece, Ireland and Portugal, and now threatens to engulf Italy and Spain.

The glamorous metal won a further boost earlier this month when Standard & Poor's removed Washington's top AAA credit rating for the first time in history, citing concerns over debt and sending global markets into turmoil.

Gold has also won more support from low global interest rates amid the faltering economic recovery.

"We believe political/economic policy inertia with regard to debt management is likely to continue to drive appetite for gold into 2012/13," added Societe Generale analyst David Wilson.

"We expect levels of over $2,000 per ounce to be achieved before year-end," he added.

"Looking further forward, a combination of continued highly accommodative monetary policy, anaemic growth, and continuing sovereign debt problems will continue to push gold to new highs."

However, research director Kathleen Brooks said that it could take some time for gold to make a clear run above $2,000.

"As it cracks fresh new highs, more people will take profit ... so a convincing break above $2,000 may take a while."

Traders are meanwhile awaiting this Friday's address from US Federal Reserve Chairman Ben Bernanke, amid speculation that he could outline fresh steps to stimulate the ailing US economy in a key speech at Jackson Hole.

"The next big driver will be news from Jackson Hole," said analyst Ross Norman at bullion broker Sharps Pixley, adding traders were eager to see "sensible (US) plans to relieve debt while maintaining some semblance of economic growth".

© 2011 AFP

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