All-time high for gold; silver at 30-year high

Gold created yet another record today as it crossed the $1313 an ounce mark on expectations of a Federal Reserve move to boost US economy. Gold for immediate delivery was seen trading at $1311.59 an ounce at 12.30p.m Singapore time (8.30am UAE) after hitting as high as $1313.50 an ounce in early trade.

“The ascendency of gold is clearly an indication of lack of confidence among investors in the global recovery theme,” M.R. Raghu, Senior Vice President-Research, Kuwait Financial Centre (Markaz), told Emirates 24-7.

The bullion hit a lifetime high, its 10th record in 12 sessions, as the dollar dropped against a basket of currencies on expectations the Fed would take new measures to shore up the economy.

“The global financial crisis has elevated gold as an asset class for many investors. The resulting impact is that investors (including institutions) today have a good chunk of gold in their portfolio (ranging from 5 to 10 per cent) as against no exposure at all to this commodity a few years before,” Raghu added.

Analysts said the US Fed is likely preparing a fresh round of quantitative easing measures to announce at the end of its November 2-3 meeting.

“The increase in gold price also signals dollar weakness going forward though dollar has done many round trips this year. Hence, further price rise of gold is a function of weak economic recovery, slow and steady rise of inflation and dollar weakness,” the Markaz expert explained.

Silver also surged to a 30-year high as ETF holdings jumped to another record, palladium rose to a five-month high to track higher base metals prices, while a firm yuan raised hopes of more buying from gold consumers in China.

London silver fix price reached $25 in September 1980, according to The Silver Institute, a US-based industrial group. Silver’s main sources of demand are for use in industrial applications such as semi-conductors and jewellery.

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