Futures prices for gold reached a new record high on Thursday, supported by uncertainty regarding the recovery of the global economy and the decline in the value of the dollar in currency markets.
The price of gold surged on Thursday to $1,123.40 per ounce, baffling analysts who last year, when gold surpassed the unprecedented threshold of $1,000 per ounce, were convinced it could not maintain such a high level. Investors consider gold a safe haven for capital rather than an investment for profit. As demand for this precious metal remains stable, so does its value. Thus, gold first reached the level of $1,000 per ounce in March 2008, shortly after the collapse of investment bank Bear Stearns, when investors bought gold due to doubts about the stability of the financial system. The current situation is different in that investors are buying gold to protect themselves from the decline in the value of the dollar.
Due to record-low interest rates in countries around the world, the appeal of currencies for investors has diminished, and foreign banks holding significant amounts of U.S. Treasury bonds, such as the Chinese, want to diversify their assets. Therefore, the news at the beginning of November that the Indian central bank purchased gold worth nearly seven billion dollars from the International Monetary Fund (IMF) triggered a gold frenzy. Its price reached unprecedented heights and has risen seven percent just this month, or 26 percent in the year to date. Some predict that if the buying frenzy does not stop, it could rise to $1,200 and even $1,500 per ounce.
