Gold News

Gold Hits New Highs vs. Dollar, Sterling & Euros as Mid-East Tensions Rise, Oil Gains

Gold Prices raced higher yet again early Tuesday, taking out a series of new 27-year highs up to $820 per ounce and recording the spot market's third session running above $800 per ounce.

The previous all-time top in Gold Prices of Jan. 1980 only managed two days above that level. Doubling in the preceding seven weeks, the Gold Market then dropped by 25% by the end of Feb. 1980. (For a chart and comparison, revisit Gold in Jan. 1980 here...)

Gold Priced in British Pounds also hit fresh record highs above £393.50 per ounce – up by one-fifth in the last 12 weeks – and for Eurozone investors wanting to Buy Gold Today, the metal finally broke the high of May 2006 above €562 per ounce.

"Commodities are in a boom cycle right now, especially with the economic growth round the world in places like India and China," says Tom Winmill, a manager at the $220 million Midas Fund.

"There’s just not enough supply. It was easier to get a mine up and running in the 1980s. Today it will take a decade of environmental permitting before you can start."

On the political front, US nuclear air-carrier Enterprise is continuing exercises in the Persian Gulf after an Iranian general threatened an attack on the Straits of Hormuz – the world's busiest shipping lane for oil tankers – last week.

NATO forces killed dozens of Taliban fighters overnight in northwestern Afghanistan. Local reports say civilians were also killed.

And across the border in Pakistan, protests continued against the Islamabad government's new martial law, designed to prevent a legal challenge to the regime of Pervez Musharraf, who seized power in a 1999 coup.

Former chief justice Iftikhar Chaudhry, now under house arrest, last night called for Pakistan to "rise up". The Karachi stock market, however, ended today little changed after dropping 5% on Monday.

Tokyo share prices slipped for the fourth day running to reach a seven-week low, while banking stocks in Europe capped three days of losses to hold the FTSE100 index 0.5% higher by lunchtime in London.

Crude oil meantime rose back above $95 per barrel ahead of tomorrow's weekly US inventory report (due at 10:30 EST). Copper prices rose on news of a disruption to supplies from Peru. Wheat futures gained after the US government said the recent spell of dry weather has damaged young crops.

Global wheat stockpiles already stand at a 32-year low.

The US Dollar meantime sank to a new record-low on its trade-weighted index, falling to $1.4532 per Euro and $1.08 per Canadian Dollar.

The Loonie only reached parity with the US greenback a week ago. The Australian Dollar has also shot higher, gaining more than 6% against the US currency in the last 10 trading sessions.

"There has been a scramble for a creditable store of value," says Ian Mellor at Bank of New York Mellon, "so gold, commodities in general, and the currencies of their producers – items of tangible worth – have risen to the top of the market’s shopping list."

Gold Prices continued to outstrip gains in even the strongest world currencies early Tuesday, however.

Versus the Australian Dollar, gold rose this morning above A$887 per ounce, a gain of more than 18% for Aussie investors since mid-August. Measured in Canadian Dollars – the world's other leading "commodity currency" – gold today broke above C$760 for the first time since May.

The Canadian Gold Price has now risen 10% from the 12-month low it hit in July.

"Only one currency [has] total integrity," says Dr.Marc Faber in the latest edition of his Gloom, Boom & Doom Report – "gold and other precious metals.

"Gold remains my preferred investment. Particularly in a debt collapse, physical gold would shine, as people the world over would become extremely concerned about, not the return on their money (interest), but the return of their money.

"While I find the Gold Price to be currently somewhat overbought, I still think that gold will be one of the best investments over the next couple of years."

To Buy Gold Today, accessing live Gold Market Prices and paying just $4 per month for secure, professional storage of your property in Zurich, New York or London, visit BullionVault now...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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