The afternoon gold fix on the London Bullion Market hit a record high due to a weakened dollar and poor economic reports for the US.
Marcus Grubb, Managing Director of Investment at the World Gold Council, said: “Against a backdrop of sovereign risk in Europe, the release of weak employment numbers in the US on Thursday brought the dollar down from its recent highs rekindling fears of a double dip recession and gold duly performed in its role as a dollar hedge.
“In addition, World Gold Council figures released today, highlight that total sales by European central banks have amounted to just 1.8 tonnes since the third central bank gold agreement began in September of last year, which is significantly below historical levels.”
Mr Grubb said gold’s scarcity and attraction as a preserver of wealth in uncertain times continue to resonate with investors.
Investors’ concern that loose monetary policy will unleash inflation is among the factors prompting interest in tangible assets such as gold.
Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.
“Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can’t be created at the touch of a button. The gold market really does have the bit between its teeth at the moment.”
Published: 3:52PM BST 18 Jun 2010
Source: The Telegraph