Gold prices rush to new record on global economy worries
Gold prices showed no signs of retreat as investors continued to worry about the global economy.
Investors, spooked by a raft of discouraging reports about slowing job growth, have been pulling out of stocks and retreating into the safety of the precious metal. Gold rushed to a record $1,663.40 an ounce Wednesday, up $21.50, or 1.3%.
Recent reports that showed sluggish job growth and layoffs hitting their highest point in 16 months spooked the stock market Wednesday. Investors also feared the possibility that rating firms might downgrade the U.S. credit rating and the severe fiscal problems facing Europe.
The turbulence has helped gold continue its decadelong upward march, analysts said.
“The gold rally is clearly supported by more than just the long, drawn-out political arguments over the debt ceiling,” according to a Tuesday report from HSBC.
The country’s credit rating could still take a hit down the line, threatening the value of the dollar, said Marin Aleksov, chief executive of precious metals broker Rosland Capital in Santa Monica. But the potential for more borrowing does the same, he said.
“The economy’s stalling. You have the possibility of a downgrade and a debt deal that’s just not enough in the long term,” he said. “If you don’t trust currency, you don’t trust the markets and you don’t trust your leaders, where else can you go but gold?”
Prices hit a record high Tuesday amid news that the Bank of Korea had bought its first batch of gold in more than a dozen years. Analysts said they expect more central banks looking to limit their exposure to a weakening dollar to follow suit.
By the end of the year, the price could reach — or exceed — $1,800, they said.
