Gold goes above $1,500 an ounce on worries over global economy

GOLD SHOT above $1,500 (€1,033.33) an ounce yesterday for the first time ever as worries over the health of the global economy boosted the metal as a safe haven.

Gold prices are up 5 per cent in April and look set to extend gains as the metal’s appeal as a haven from risk was boosted by talk that Greece may have to restructure its debt, together with a threat from Standard & Poor to downgrade the US’s triple-A credit rating.

“Given that all major currencies are becoming more debt laden by the day, gold’s finite currency credentials are again being appreciated,” said Dublin bullion dealer GoldCore. However, the firm also noted that gold was only at record highs in nominal terms, and not in real (ie, inflation-adjusted) terms.

“There is still going to be a lot of uncertainty over the strength of growth, in the United States in particular,” said Macquarie analyst Hayden Atkins.

“It looks like that is going to be quite weak in the first quarter, so that may rattle a few people. Then we have a critical policy point coming up with the expected end of quantitative easing.

“There is enough uncertainty floating around heading into the middle of the year for people to stick with gold,” he said.

While investors in the US and Europe are seeing the metal chiefly as a safe store of value and a hedge against currency devaluation, stronger inflation and rising consumer incomes in China and India are also boosting demand.

In the short term, losses in the dollar yesterday supported the precious metal above $1,500 an ounce.

Silver tracked gold higher, extending a performance that has seen the metal outperform other precious metals this year. Silver hit a 31-year high at $44.56 an ounce and was later bid at $44.51 against $43.89. – (Reuters)