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Gold Prices Hit $1500 an Ounce

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The price of gold hit $1500 an ounce for the first time ever today as gold futures for June delivery reached $1500.50 an ounce. This intraday high was briefly reached before resettling to $1495 an ounce. The sudden Gold Spike comes on news from Standard & Poor’s report that the U.S outlook for long-term debt has been reduced from stable to negative. In addition uncertainty regarding the strength of the dollar has driven investors to look for an alternative. Their concerns regarding US debt, and the deficits has boosted demands of precious metals as an alternative to holding the dollar.

The price of gold has kicked up words continually for the last several months. Lim Chae Myung of Hyundai Futures recently said “The bullish trend becomes pronounced as more and more people get out of the dollar to buy hard assets.” Gold futures have increased approximately 31% over the last year. Some analysts are now expecting gold prices may reach $1600 an ounce by the end of 2011 or sooner.

Today immediately delivery of gold increased by up to 0.3 percent to reach an all-time high of $1,499.32 before pulling back. Carlos Sanchez of CPM Group said, “prices could go as high as $1,550 in the next couple weeks as investors focus on political gridlock in Washington.”

The deadline for reaching an agreement on whether or not to raise the debt ceiling in the US is to in May. Depending on the news coming out of Washington DC the debt ceiling events will most likely creates further activity.
APMEX Gold and Silver

Gold at $1500 – Will it Happen Soon?

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Gold prices of$1500 an ounce moved closer to reality today as prices rose almost half a percent on early trading. This came as a response from Standard & Poor’s negative outlook on the US economy. This news fueled a sharp rally in gold futures. With April contracts reaching a record of $1,496.40 per troy ounce.

The Standard & Poor’s report revised its outlook on the US economy today, from stable to negative. This is in large part due to growing government budget deficits and debt. Nikola G. Swann a credit analyst recently said, “We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013.”

Gold is traditionally sought after as an alternative currency in times of political uncertainty, and rising inflation. Gold investors in the Euro zone are also moving to precious metals in response to fears that Greece will default on their debt payment promises.

Meanwhile, worries in Asia due to larger than anticipated inflation data from China is creating record gold prices there.  Commerzbank analysts have reported that, “Uncertainty among market players should persist and gold should remain in high demand as a safe haven.”

With the latest news from Standard & Poor’s revised outlook about the US economy, the report regarding China’s inflation worries, and news of Greek default from the Euro zone, it looks like gold could reach $1500 an ounce quicker than anticipated.