The price of gold hit a new record yesterday, reaching $1,607 per ounce as concerns that the US debt crisis is no nearer being resolved and fears that the eurozone debt crisis will spread helped to drive up the price.
Gold has increased in value for each of the last 11 days, a new record as investors search for a safe investment during a period of prolonged global economic uncertainty. Gold was valued at £1,000 an ounce for the first time ever.
The eurozone crisis and concerns that the debt crisis in the US could lead to a default has increased the appeal of gold and other havens for investors such as silver and currency vehicles such as Swiss francs. Silver reached $40 an ounce, its best price for two months.
Many investors expect gold to increase still further but by how much depends on certain factors. If the US defaults on its debt, if the eurozone crisis spreads or if there is a further injection of quantitative easing into the economy then it is very likely that the value of gold could increase significantly more than its current record levels.
Further turmoil in the markets could come after Thursday’s crunch meeting of eurozone leaders in Brussels where they will try and reach an agreement on how to contain the debt crisis and aid Greece so that it does not default on its debt and drag other countries into the crisis.
In the United States politicians look no closer to reaching an agreement on a deficit reduction plan before the deadline of August 2nd in order to avoid the US defaulting on its debt repayments. Investors are concerned that this will lead to a further round of quantitative easing, which, in effect, serves to devalue the dollar and makes gold a more attractive investment.
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