Worldwide Financial Fears Send Gold Prices Soaring

Gold prices reached a record high of $1,580.70 an ounce Wednesday.

On Wednesday, gold prices reached $1,580.70 an ounce, setting the stage for the eighth consecutive day of gains — a record unmatched since 2006. The price reflects worldwide financial fears, as the euro zone and United States debt crises rage on.

“Gold will keep rising for the next five years, even if it has some crests and troughs,” Michael Widmer, an analyst at Bank of America-Merrill Lynch, told Reuters.

“Those holding gold should hold onto it, while others should probably get their hands on it as it is going to be on an upward trend. The sovereign debt crisis is helping the gold prices rise but even if it is addressed in the short-term, the developed countries are in so much debt that it will continue to drive gold up for the next 10 years.”

The article pointed to an upcoming meeting of European Union leaders, which will discuss a possible Greek default, as evidence that markets are continuing to lose confidence in a recovery. In addition, credit rating agency Moody’s downgraded Ireland’s sovereign rating to junk status, just one week after it had lowered Portugal’s rating to junk.

“On the other side of the Atlantic, minutes of the Fed’s last meeting showed some Federal Reserve officials believe further monetary policy easing could be needed if the recovery remains too sluggish to cut the stubbornly high U.S. jobless rate and if inflation eases as expected,” the article read.

“With European sovereign debt fears intensifying again, little clarity on what euro zone officials intend to do next and cross-asset market confidence taking a bashing, gold has been a beneficiary, much like the Swiss franc. And in this nervous environment, we prefer assets that have limited downside exposure — i.e. gold over other precious metals and commodities,” Edel Tully, a strategist for UBS, a wealth management group, told Reuters.






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