Gold tops $1,850/oz

[miningmx.com] — GOLD surged more than 1% to a record high above $1,850 an ounce on Friday, as investors reached for the safety of bullion amid a worsening economic outlook for the United States and concern about the
health of Europe’s banks.

Disappointing US manufacturing and housing data fuelled worries that growth in the world’s largest economy has stalled.

Renewed fears about the health of Europe’s banks encouraged the flight of investors from stocks to safe haven bets such as gold.

Spot gold rose 1.6% to an all-time high of $1,853.2 an ounce during early trade. It was on course for a 5.9% weekly rise, its seventh gain in a row and the largest since February 2009. The metal had hit nine record highs, and risen nearly 14% so far this month – its best month since September 1999.

“It’s not surprising in view of more concerns about Europe and terrible data out of the US,” said Darren Heathcote, head of trading at Investec Australia. “It looks unlikely that gold would fall particularly at the present time, given there’s so much uncertainty and nervousness in the markets.”

The uncertainty in the global economy would likely boost the prices of bullion further to $1,900 an ounce in the next six months, said metals consultancy GFMS, a unit of Thomson Reuter

“Clients are stunned by the rapid price rally and don’t know what to do,” said a Singapore-based physical gold dealer. “Most of them are now waiting to see what is going to happen next.”

Gold’s one-quarter gain from July has stoked expectations of a correction in prices among some, but fear of another economic recession will provide a strong floor for any price dip, analysts and traders said.

“The way the market is going, anything is possible,” said Heathcote of Investec. “We could see $1,900, we could see it back to $1,700 before
you know it, but it would take a very significant change in sentiment to see the latter.”