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.