Gold Prices Hit All-time High
Gold prices reached an all-time high of $1,505.70 per ounce as fluctuations in debt, dollar and inflation spawned negative expectations for the global economic recovery on Wednesday, April 20, 2011.
Investors increased their required interest premiums when news said that the US is currently in the edge of defaulting on its debt unless the Whitehouse and congressional leaders start taking action to raise the $14.3 trillion cap on borrowing in the next weeks.
The dollar is also weakening because of Standard & Poor’s warning to cut the US bond’s AAA credit rating if the government still can’t find a way to control its debt limit, said Mark Lushini, chief investment strategist of Janney Montgomery Scott.
Inflation is also heightening particularly in Latin America as China and India echoed the rise with Brazilian prices nearing the government ceiling and Mexican inflation rates exceeding targets.
Gold prices are not expected past the present level unless another negative news comes in, according to ANZ Commodities Strategist Natalie Robertson, who added that if there is, the news will probably be about the Eurozone sovereign debt.
Gold has been long time seen as a retreat from risk. During the financial crisis of 2009 and 2010, it was heavily bought for that purpose and now, as doubts about economic recovery grow, it is luring more speculators to take it as a one-way bet.
Together with gold, silver is also soaring, reaching $45 for the first time since 1980 for the fifth consecutive session. It is expected to reach $50 later as it is increasingly demanded for industrial consumption.