[miningmx.com] — London – Gold soared to a record high as investors took stock of global economic prospects and sought refuge in assets seen as safe havens.
The US currency tumbled against the euro, the yen and the Swiss Franc which – like gold – attracts investors as a sure bet in times of trouble.
The euro in late day trade was up to $1.3018 from $1.2880 on Monday.
The dollar meanwhile was trading at 83.04 yen against 83.64 on Monday. But at one point the greenback plunged to 82.93 yen, its lowest reading since May 1995, after Prime Minister Naoto Kan easily overcame a challenge to his party leadership from veteran powerbroker Ichiro Ozawa.
The news led traders to buy the yen as they considered a win for Kan meant that any immediate intervention on the currency markets to stem the yen’s rise was unlikely.
The dollar also fell to 0.9944 Swiss francs from 1.0076 on Monday.
The price of gold later struck an all-time high above $1 269 an ounce on Tuesday.
Gold hit $1 269.45 on the London Bullion Market at 16:10, beating the previous record of $1 265.30 an ounce struck on June 21.
“Renewed sovereign debt concerns” have driven up gold, said Robin Bhar, senior metals analyst at Credit Agricole bank.
Fears of a resurgent eurozone debt crisis are likely to stunt European economic growth prospects this year, the EU warned on Monday.
“The global recovery is still expected to be uneven and is surrounded by major uncertainties,” the European Commission said in its autumn forecast, citing “the resurfacing of global imbalances, high debt levels and lingering tensions in sovereign-debt markets.”
Gold, whose two main drivers are jewellery and investment buyers, is also regarded as a good store of value in times of high inflation.
In another development, metals consultancy GFMS predicted that gold was set to reach a record high above $1 300 an ounce this year.
“I think we could easily see gold spike comfortably above $1 300 before the year’s out,” GFMS chairperson Philip Klapwijk said in the independent group’s latest annual survey of the precious metal.
“We’ll probably get a fair bit of profit taking as we head into the New Year but I wouldn’t take that as a sign that the party’s over – further gains in 2011 are far from out of the question.”
The euro began the day by losing ground against the dollar after data showed a collapse in German investor confidence.
The euro stumbled as the ZEW institute’s sentiment indicator for Europe’s biggest economy plunged 18.3 points to minus 4.3 points in September – its fifth consecutive monthly drop and its second unexpectedly sharp loss in a row.
Tuesday’s survey “reflects the idea that growth in Germany is expected to fall back significantly during the next six months, following the exceptionally strong growth seen in the first half of the year,” said ABN AMRO bank economist Aline Schuiling.
But sentiment shifted later in the day as the dollar came under pressure on macroeconomic concerns.
While US retail sales were reported to have risen for the second straight month in August, economists at Briefing.com warned that sales were “likely to remain weak for quite a while given the current trends in employment, and the negative wealth impact for depressed prices for homes and stocks.”
In London on Tuesday, the euro changed hands at $1.3018 against $1.2880 on Monday.
The dollar stood at 83.04 yen and 0.9944 Swiss francs. The pound was at $1.5572.
On the London Bullion Market, the price of gold rose to $1 265.50 an ounce at the fixing from $1 243.75 an ounce on Monday.