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Sunday, February 22, 2009

Gold Hits $1000 New High Near

he spot gold price broke through the psychologically important $1,000 level on Friday as global markets fell and investors sought a safe haven.
By Gary White
The price hit $1004.99 an ounce at 12.56pm in New York trading. Earllier in London it had flirted with the $1,000 level, hitting 999.10 an ounce at 2pm in London, before sliding to at $989 later in the session.

Natalie Dempster of the World Gold Council said: “People are fearful of the combined impact of near-zero interest rates, quantitative easing and the fiscal stimulus packages on future inflation. Investors are looking at both the solutions to the problem and the problem itself and realising that both are positive for the price of gold.”

Falling stock markets boosted the appeal of the precious metal as the Dow Jones Industrial Index fell 2.3pc by lunchtime in New York.

In London, the FTSE 100 slid 129.3 - or 3.2pc - to close at 3889.06. The index has fallen 7.2pc this week and and has now fallen 12.3pc since the start of the year.

Germany's DAX fell 4.8pc and France's CAC dipped 4.25pc.

Spot gold hit its all-time high in dollar terms of $1.033.90 in intraday trade on March 17 last year, before falling to around $680 in October.

In a report to clients issued on Friday, Barclays Capital noted that gold was outperforming other asset classes and it could reach new highs later in the year as inflation returned, the oil price moved higher and the dollar started to weaken.

“Precious metals are not only the best performing commodity sector by a substantial margin (all the rest are in negative territory), but also the best performing asset overall, with stocks and property down sharply year-to-date,” it said.

Gold has been in an uptrend since February 2001, when the price was at $254.

The current spike will raise more questions about Gordon Brown’s decision as Chancellor of the Exchequer to sell of more than half of the country’s gold reserves. He sold off 400 tons of bullion in a series of auctions between 1999 and 2002 in a move that some analysts say cost the country more than £2bn.

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