Thu, Jul 14, 2011 - Page 11 News List

Gold rises to record high amid concern over eurozone debt


The price of gold surged to a record close to US$1,580 an ounce in London yesterday, as investors switched into the metal in search of safety from the eurozone debt crisis, traders said.

The price of gold reached US$1,578.72 an ounce by mid-day on the London Bullion Market, beating the previous record of US$1,577.57 set on May 1. It stood at US$1,573 an ounce in afternoon trade.

“Gold hit a new all-time high today as investors continue to fret over the European sovereign debt situation,” said analyst Ian O’Sullivan at trading firm Spread Co, adding that the metal had risen for eight days in a row.

“With Italy, Spain, Ireland and Portugal worries intensifying and now the [US] Fed [Reserve] minutes suggesting some members were thinking about the need for additional easing, investors have just hit the panic buy buttons this week,” he said.

“We think that gold may top out here for a while and pull back to US$1,520 to [US$]1,540, before an assault on the US$1,600 level,” he added.

EU governments are scrambling to fight debt contagion choking Italy and Spain, amid mounting sentiment that Greece could default on its debt despite a massive EU-IMF rescue.

Added to the mix, Moody’s rating agency unexpectedly slashed Irish government bonds to junk status on Tuesday, which sent borrowing costs to the highest levels since Ireland joined the eurozone.

Gold won further support from better-than-expected second-quarter economic growth of 9.5 percent year-on-year for Asian powerhouse China, which is a major consumer of commodities.

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