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Gold soars to record high on dark unsteady economy
By Catholic Online (NEWS CONSORTIUM)
August 21st, 2011
Catholic Online (www.catholic.org)
August 21st, 2011
Catholic Online (www.catholic.org)
Gold rose 1.5 percent this week, setting a record high for a second day,
leading to its biggest one-week gain in 2-1/2 years. Gold prices are
riding high on worries about stalled U.S. growth coupled with Europe's
debt crisis. "Right now, gold is inversely correlated with fear and
nothing else. When stocks are down, gold's up," Frank McGhee, head
precious metals trader at Integrated Brokerage Services LLC says.
Rallying around 3 percent to a record $1,877 an ounce earlier in the session, bullion sharply pared initial gains as Wall Street found its footing on technical support. Rising oil and commodity prices drained some safety bids for gold after it had gained 6 percent over the past five days.
Some analysts have suggested that Federal Reserve Chairman Ben Bernanke could unveil a third round of quantitative easing to revive economic growth.
Spot gold was up 1.4 percent at $1,849.49 an ounce by 11:59 a.m. EDT, on track for its biggest one-month rise in nearly 12 years in August and up 30 percent so far this year. U.S. gold futures for December delivery were up $31.70 at $1,853.50 an ounce. That other precious metal, silver, rose 3.5 percent to $42.01 an ounce.
Sluggish German growth numbers coupled with a weak U.S. manufacturing report sparked heavy selling of equities and riskier assets such as industrial commodities.
"At the moment the market is just looking for relative safe havens," Mitsui Precious Metals analyst David Jollie said. "You can see that in the selloffs across equity markets overnight. The strength of gold is the other side of the coin from that."
A near $400 rally in the price of Midas' favorite has caused some strains in gold vault storage space particularly in the western United States, and some retail clients have had to pay higher service fees, Savneet Singh, chief executive of Gold Bullion International, told Reuters.
Singh said the premium of small physical bullion bars is now much higher above spot gold due to huge demand. GBI sells physical precious metals and offers delivery and storage services to institutional and retail investors.
Speculation ran high that the CME Group, the world's largest commodity exchange, could raise margins on gold futures once more, after a similar move this month dampened the precious metal's sharp run higher.
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