Gold hits record high above 1,278 dollars

16th September 2010, Comments 0 comments

The price of gold struck an all-time high above 1,278 dollars on Thursday as investors sought safety against a fragile economic recovery.

Gold hit a record 1,278.02 dollars an ounce at 1:30 pm (1230 GMT) on the London Bullion Market. It stood at 1,274.77 dollars in late trade.

The metal has been chalking up a series of record highs this week, hitting almost 1,275 dollars on Tuesday to break June's record of 1,265 dollars.

Gold is seen as a safe haven investment and also a hedge against inflation.

"Gold once again surged to a new high ... before easing slightly following the better than expected US Jobless claims," said analysts at London-based trading firm Spread Co.

VTB Capital analyst Andrey Kryuchenkov added: "It is investment demand that drove prices to fresh highs and it could well push it to 1,300 dollars but it is getting to the point where many will be seeking to book profit also as (supply and demand) fundamentals fail to justify gains from here."

Metals consultancy GFMS expects gold to top 1,300 dollars before the end of 2010.

London-based GFMS on Tuesday said demand from investors had been the prime driver of the gold price's rally during the first half of the year.

"Gold certainly lived up to its reputation as a safe haven in troubled times," GFMS chairman Philip Klapwijk said in the group's latest annual survey of the precious metal.

"Just look at the explosion in investor interest that followed the sovereign debt crisis unfurling in Europe," he added.

The EU on Monday warned that fears of a resurgent eurozone debt crisis were likely to stunt European economic growth prospects this year.

Meanwhile on Thursday, analysts said that the US economy remained fragile despite a drop in the number of people claiming jobless benefits in the world's biggest economy.

"The overall message from the claims data continues to be much the same," said analysts at

"The pace of layoffs has slowed, yet the elevated level of initial claims continues to be consistent with relatively weak levels of job growth."

Claims for the week to September 11 fell to 450,000, down 3,000 from the previous week's revised figure, bringing them to their lowest level since May, according to the Labor Department.

The latest figure was better than most economists' expectations of 460,000 new claims.

But Andrew Gledhill, analyst at Moody's, said that with jobless claims at 450,000, "the labor market recovery has a long way to go."

"Claims at this level suggests that businesses are still anxious and cutting payrolls at a pace faster than what is typical in expansion," he said.


© 2010 AFP

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