Gold hits $1,300, silver gains as U.S. dollar weakens again
Michael Babad
RTGAM
Gold reaches milestone.
Gold hit another milestone this morning while silver reached its highest level in about three decades as the U.S. dollar weakened again. Gold hit $1,300 (U.S.) an ounce, a record, before slipping back just marginally, while silver climbed to $21.3875 an ounce, also before slipping back.
Gold has gained about 18 per cent this year - Bloomberg News notes it is heading for its 10th annual gain in a row for the longest streak since at least 1920 - and some analysts project it will continue to climb. Normally a hedge against inflation, investors have flooded to the safety of bullion amid rising fears that the U.S. economy will continue to sputter.
"Fears of runaway inflation or a dollar collapse, which underpin some of the most bullish forecasts for gold, remain exaggerated," Capital Economics in London said in a report yesterday. "Nonetheless, prices should continue to be supported by strong demand for a safe haven from other potential economic and financial shocks, such as a U.S.-China trade war and the breakup of the [euro zone].
Believing inflation will remain low, Capital Economics said any fading demand for gold as a hedge against inflation could be replaced by heightened demand for a safe haven. The report projected prices will remain high for several years, dipping slightly to $1,200 an ounce by the end of this year but rallying further next year to at least $1,400 "as new shocks hit the global economy and financial system."
