Gold hits record high

Gold hits record high

Gold soared to an all-time high this week as currency volatility and increasing fears over the state of eurozone debt boosted its appeal.

The precious metal soared to an intra-day record of $1,254 an ounce, before retreating to $1,248 in afternoon trading on Tuesday.

Its sharp rally saw prices smash through the previous record high of $1,243 an ounce set on 12 May, as investors flocked to the metal as a safe haven, and prompted talk of higher prices to come.

Jeremy Batstone-Carr, director of research at Charles Stanley, comments: "Gold is a gigantic bull market. Increasingly gold is looking like a currency in its own right. I see the sterling falling, the euro falling, the dollar and the yen both falling so where do you go?

"The answer is into the previous metal that provides a great hedge against default, devaluation and deflation. It is definitely going higher."

Gold's stellar rise came in the wake of the euro plunging to a four-year low against the dollar and rising concerns that debt issues could hinder Europe's economic recovery.

Britain was the latest country to be forced into the spotlight, after ratings agency Fitch warned that the country's gaping deficit was 'formidable'.

Such fears have fuelled speculation of a second slide into recession, which has boosted the appeal of safe haven assets.

Analysts at Barclays Capital said: "Gold prices have set all-time highs and not just in dollar terms, as safe haven buying remains ripe."

Gold has set new highs in euro terms, as well as sterling, the Indian rupee, the South African rand and the Chinese yuan among others.

Brad Yim, portfolio manager at Castlestone Management, believes a combination of fear triggered by recent headlines and an increase in the amount of long positions within the gold market has helped to boost prices.

"I think volatility will persist in the near term at this elevated level, however there is always a high risk of knee-jerk policy reactions prompting more uncertainty in the market which will be positive for gold."

With investors remaining jittery and markets swinging between huge gains and losses, the yellow metal has risen around 12% so far in this latest quarter.

Its success was rubbing off on fellow precious metal silver which notched up gains of 4.5% on Monday.

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