inflation

Price of Gold Increases Above $1500 An Ounce

The price of Gold raised above $1500 an ounce yesterday, and today continues to climb. $1500 an ounce gold was an all-time high milestone. Today major stock markets shot up in large part due to strong corporate earnings in Europe and the United States. Overall there was a prime commodities rally after the Dow reached a near three-year high.

However, weakness in the US dollar, and Greek debt defaults concerns with the Euro continue to dog the currency markets. Inflation and debt worries continue to push commodity prices upward. Currencies that benefit from higher commodities including the Australian, and Canadian dollar are performing well. Bullish investors of Gold call options have been very active this week.

According to analysts at Capital Economics we can expect to reach $1600 an ounce before the end of the year. Some experts anticipate gold will continue to climb and could even reach $2000 an ounce before 2012.

The main drivers of high gold prices lately are due to slower than anticipated economic growth in the US, Asia and Euro zone, as well as destabilizing events such as the earthquake in Japan and political unrest in the Middle East. Another factor played a part in the rise of Gold is the support for finding an alternative to the US dollar as the world’s reserve currency.

Jim Steel a precious metals analyst with HSBC recently said, “Any increase in non-US dollar assets would likely be indirectly supportive of gold, especially if it weakened the U.S. dollar’s status as a reserve currency.” Gold futures hit a record for the ninth time so far this month.

Another big winner this week was silver which rose above $45 an ounce for the first time since 1980. This is a 31 year high for silver. It has increased by almost 150% in the last year alone. Gold and silver prices often rise in times of economic upheaval and news of problems with the economy. With debt and inflation concerns being fueled by the S&P’s recent downgrade of the US debt outlook from stable to negative, it looks as if precious metals will continue to climb.

Gold at $1500 – Will it Happen Soon?

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.

Gold Prices Have Soared to Record Highs

With all the printing of money going on around the world gold investing has become the ultimate safe haven for a hedge against weakening currencies and inflation.

India’s central bank has just purchased 200 tonnes of gold from the International Monetary Fund. The 6.7 billion dollar purchase surprised the markets and was the biggest single central bank purchase over such a short period over the last 30 years.

The IMF plans to sell about 400 metric tonnes of gold this year in order to increase its finances and increase lending to developing countries.