By Agency Reporter

Wednesday, 10 Nov 2010

LONDON: Gold surged to a record high for the fourth day running on Tuesday, fuelled by renewed concern over high sovereign debt in euro zone countries such as Ireland and Greece and inflationary pressures.

Silver, according to a Reuters report on Tuesday, touched $28.46 an ounce, the highest since March 1980, palladium saw $728.22 an ounce, its highest since April 2001. Platinum hit $1,790 an ounce its highest since July 2008.

Spot gold hit $1,422.30 a troy ounce. The precious metal was bid at $1,418.80 an ounce at 1256 GMT from $1,409.09 late in New York on Monday. United States gold futures also hit a record $1,422.10 an ounce.

”We have a combination: inflation fears, currency market uncertainty, fears about the financial strength of some countries,” said Alexander Zumpfe of Heraeus Metals.

Zumpfe said remarks by World Bank President, Robert Zoellick, that leading economies should consider readopting a modified gold standard, had also helped reignite interest in the precious metal.

Worries about price pressures were reinforced last week by the US Federal Reserve, which announced further monetary policy easing to help boost economic growth in the world‘s largest economy, the United States.

”Inflation concerns and euro zone debt worries have helped accentuate the surge this week initiated by the weakness in the dollar,” said investment bank Fairfax in a note.

News that the Fed would buy back $600bn of US government bonds initially weakened the dollar and propelled commodity prices higher, particularly gold, which has gained nearly 30 per cent this year so far.

Also on the radar is this week‘s G20 summit. Officials from Germany, Brazil, China and South Africa are among those expressing concern that the Fed‘s policy could weaken the dollar and drive up commodity prices.

If the G20 fails to defuse global tensions, it may heighten investor concerns that policymakers are drifting further apart, leaving the world economy vulnerable.

 

Source: Punch