Business / Economy
Gold hits record high ounce price
19 Apr 2011 at 08:11hrs | Views
Gold hit a record high of $1,497.95/oz yesterday after Standard and Poor's downgraded its long-term outlook for the US from "stable" to "negative".
The precious yellow metal edged within a few dollars of the key $1,500/oz mark as investors again looked for a safe place to put their money.
Investors have been pouring into gold and silver over the past few weeks as increased inflationary and sovereign risks decreased appetites for currencies and stocks. Silver also moved higher yesterday, touching $43.58 at lunch time.
The gold price has gained 4.3% this year, after rising close to 26% on an annual average basis last year.
Gold's latest move was, however, triggered by S&P Ratings Services' announcement that, while it affirmed its "AAA" long-term and "A-1+" short-term sovereign credit ratings on the US, it had revised its outlook on the long-term rating of the US sovereign debt to "negative".
"Although we believe these strengths currently outweigh what we consider to be the US's meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the 'AAA' level," said S&P's credit analyst Nikola G Swann.
"More than two years after the beginning of the recent crisis, US policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," Swann added.
In 2003-08, the US's general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most 'AAA'-rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.
This was after the market woke up this morning having to digest the weekend meetings of the G20 group of nations, the International Monetary Fund and World Bank.
As the BullionDesk noted, overall sentiment appeared more optimistic despite G20 officials warning that economic "downside risks still remain".
The BullionDesk cautioned that a pullback could be seen in gold and silver, given the gains seen in recent weeks, but said the rise in electronically traded funds holdings suggested renewed demand among larger institutional level investors as rising debt problems could dampen economic recovery in the euro zone.
This, when coupled with other factors such as inflation, unrest in the Middle East and north Africa, as well as the impact of Japan's earthquake, caused the BullionDesk to "expect dip buying to underpin the metals with upside momentum to continue".
The precious yellow metal edged within a few dollars of the key $1,500/oz mark as investors again looked for a safe place to put their money.
Investors have been pouring into gold and silver over the past few weeks as increased inflationary and sovereign risks decreased appetites for currencies and stocks. Silver also moved higher yesterday, touching $43.58 at lunch time.
The gold price has gained 4.3% this year, after rising close to 26% on an annual average basis last year.
Gold's latest move was, however, triggered by S&P Ratings Services' announcement that, while it affirmed its "AAA" long-term and "A-1+" short-term sovereign credit ratings on the US, it had revised its outlook on the long-term rating of the US sovereign debt to "negative".
"Although we believe these strengths currently outweigh what we consider to be the US's meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the 'AAA' level," said S&P's credit analyst Nikola G Swann.
"More than two years after the beginning of the recent crisis, US policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," Swann added.
In 2003-08, the US's general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most 'AAA'-rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.
This was after the market woke up this morning having to digest the weekend meetings of the G20 group of nations, the International Monetary Fund and World Bank.
As the BullionDesk noted, overall sentiment appeared more optimistic despite G20 officials warning that economic "downside risks still remain".
The BullionDesk cautioned that a pullback could be seen in gold and silver, given the gains seen in recent weeks, but said the rise in electronically traded funds holdings suggested renewed demand among larger institutional level investors as rising debt problems could dampen economic recovery in the euro zone.
This, when coupled with other factors such as inflation, unrest in the Middle East and north Africa, as well as the impact of Japan's earthquake, caused the BullionDesk to "expect dip buying to underpin the metals with upside momentum to continue".
Source - Sapa
