Gold Prices Race to Set New Highs

Gold Prices Race to Set New Highs

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Gold prices hit an all-time high above $ US1400 an ounce. Since the Federal Reserve approved $ US600 billion worth of Treasuries last Wednesday, gold has risen nearly 6%.

 

Last Wednesday, the Fed announced to buy $ 600 billion of longer-term Treasuries through the middle of 2011. There had been concerns about the creation of asset bubbles, further weakness of the dollar, and higher prices for commodities. Consequently, its program boosted oil, gold, sugar, and silver spike and caused the U.S. dollar to slide. A lower greenback is attractive for foreign investors to buy.

 

Gold price surged above $ 1,400 Monday as commodity prices continued to go up on the back of the Fed’s bond buying program. The price of precious metal settled at $ 1,403.20 an ounce. Investors remain concerned about inflationary pressures.

 

According to Miguel Perez-Santalla, vice president of sales at Heraeus Precious Metals Management, if investors continue buying precious metals instead of other recourses, gold price is going to hike. Dennis Gartman, a commodities expert, said that metals “have become currencies for all intents and purposes”. Joe Foster, portfolio manager for the Van Eck Global international investors gold fund, also indicates that investors are turning to precious metals to preserve their wealth.

 

Overnight, U.S. December gold futures surged to $ US1,405, up $ US7.30 an ounce. The spot gold climbed to $ US1,407 an ounce.

 

The U.S. intends to print money to overcome its economic difficulties. With this intention, analysts predict that gold prices will break $ US1500 an ounce at the end of the year. Goldman Sachs projected gold could climb to $ 1,600 an ounce.

 

Commodities are likely to go higher in the upcoming months. On Monday, cotton futures rose more than 4% amid worries about the impact of bad weather on cotton crops in China. Oil prices rose over 5% in October. Sugar, corn, and wheat have recorded new highs for two recent months.