World gold hits record above $1,030

Global gold prices shot up to record highs on Monday as investors fled to safe haven assets on the back of deepening worries about the US financial sector and new lows for the dollar. Spot gold traded at $1,023.95/1,025.00 an ounce after hitting a high of $1,030.80. On Friday, it closed at $996.90/ 997.70 in New York. “The current macroeconomic backdrop, particularly in the United States, is bringing new buyers into the gold market. The downward pressure on the dollar and general uncertainty are supporting the market,” said Michael Widmer, analyst at Lehman Brothers. “What is really important for this week is to see what the Fed is doing,” he said.

Gold’s attraction as an alternative investment has helped boost price by over 23 per cent this year alone. It gained 32 per cent in 2007. Gold hit $850 an ounce in 1980, lifted by a combination of high inflation linked to strong oil prices, the Soviet invasion of Afghanistan and the impact of the Iranian revolution. After adjusting for inflation, the 1980 high is equivalent to $2,119.30 an ounce at 2007 prices. The average for the whole of 1980 has been calculated at $1,532.14, according to precious metals consultancy GFMS Ltd.

In other metals, silver set a new 27-year high at $21.24 and was last traded at $20.99/21.04 an ounce, up from $20.63/20.68 in New York. Platinum fell to $2,005/ 2,025 from $2,070/ 2,080 an ounce in New York. Palladium declined to $488/493 an ounce from $509/514.