Gold hits record, silver 31-year high

24th March 2011, Comments 0 comments

Gold soared on Thursday to a fresh record, taking silver along with it to 31-year highs as investors bought the precious metals as a safe haven amid growing concerns over the Middle East and Portugal.

Gold hit a record $1,447.82 per ounce in afternoon trade on the London Bullion Market and silver jumped to $38.16 an ounce -- its highest level since February 1980.

"Gold and silver are justifying their reputation as safe havens, which is hardly surprising in the current climate," said Commerzbank analyst Carsten Fritsch in a research note.

"In addition to the war in Libya, the unrest in the Arab region and the disaster in Japan, the debt crisis in eurozone periphery countries has also returned with a vengeance to the centre of market interest."

In Portugal on Wednesday, all five opposition parties voted against the Socialist government's fourth cost-cutting plan aimed at avoiding a multi-billion euro financial bailout like those given to Greece and Ireland.

Prime minister Jose Socrates, who headed a minority government, immediately resigned.

The political drama threatened to derail a two-day EU summit, which was to open in Brussels later Thursday and is expected to finalise the bloc's response to a year-long eurozone debt crisis.

"This parliament's decision signals to the market that Portugal's saving efforts are diminishing. Furthermore, it seems almost unavoidable that Portugal will have to tap into the EU rescue fund," Fritsch said.

Both precious metals won further support on Thursday as the dollar fell following weak manufacturing data in the United States.

Commerce Department data showed a significant 0.9 percent fall in US factory orders in February, against expectations of an increase from the low January figures.

A weaker dollar boosts dollar-priced commodities because they become cheaper for buyers using stronger currencies. In turn, that tends to stimulate demand and prices.

© 2011 AFP

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