Gold price hits new record as it breaks through $1,250

By Richard Evans
Published: 11:59AM BST 08 Jun 2010
The price of gold rose to an all-time high point above $1,250 an ounce on Tuesday, as investors nervous about the weak state of the global economy sought safety in the precious metal.
At about 09.25 GMT on the London Bullion Market, gold hit a record $1,251.85 an ounce.
“Gold rallied to a new all-time high this morning as worried investors continue to pile in to the precious metal,” said Rajesh Patel, head trader at financial betting firm Spread Co.
“We are seeing continued signs of stress in the financial markets and investors, novice to expert are looking at gold now as a hedge against further turmoil.” Gold is viewed as a safe-haven investment in times of economic trouble.
US gold futures for August delivery hit a record high $1,254.50, and were later up $10 at $1,250.80. The precious metal also hit record highs in euro, sterling and Swiss franc terms.
Investors’ concern that loose monetary policy will unleash inflation is among the factors prompting interest in tangible assets such as gold.
Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.
“Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can’t be created at the touch of a button. The gold market really does have the bit between its teeth at the moment.”
Not everyone shares this bullish view, however. Robert Prechter, the president of Elliott Wave International, who is known for forecasting a big bull market in stocks in 1982 and for getting out before the 1987 stock market crash, told the Reuters Investment Outlook Summit in New York that the gold price could drop by 40pc because of bearish technical momentum and deflation amid a European debt crisis.
“The time to get excited about gold was back in 2001 when no one wanted it,” he said. “And now everyone seems to want it, so I don’t.”
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