The price of gold has broken through the $1,000 for the first time since February this year.
Gold has broken through the $1,000 barrier for the first time in seven months on a weaker dollar and concern that inflation may return.
Bloomberg said that the contract for December delivery surged to $1,004.70 on the Comex division of the New York Mercantile Exchange,
The price of gold has been boosted by the strong demand for gold from investors looking for a safe-haven asset amid the economic uncertainty.
Last month it emerged that the Royal Mint has had to double production of gold coins to keep up with demand, while people have invested in gold exchange-traded funds in record numbers. Websites have joined the rush, offering to take gold jewellery off your hands for cash.
Demand remains strong too with investment companies launching new funds to meet demand.
Rivington Street Holdings, media and financial services group, has just completed a £2m fund-raising for its Smaller Companies Gold ICVC – more than double its expectations.
Meanwhile, Sector Investment Management (SIM), has just launched its Junior Mining fund, focusing on gold mining shares, with 70pc of the portfolio allocated to this sector.
Angelos Damaskos, the fund manager of Junior Mining said that even if equity markets continue to recover, gold is likely to be underpinned by increasing fears of post-recession inflation and US Dollar weakness. He added that gold shares in the credit crunch lagged the rise in the metal and are relatively more attractive at the present time.
SIM is 35pc owned by Jim Slater, the legendary 1960s asset stripper and stock market tipster and former director of Galahad Gold Capital.
Analysts are also optimistic. BMO Capital Markets says that bull case for gold hints the price could reach US$1,300/oz in 2011.
In a recently published report, BMO analysts said: "The metal (gold) will likely be energised again late in 2010 amid a weakening greenback and rising inflation concerns, as the US economic recovery takes root and as post-recession growth becomes entrenched.
"At that time, risk taking should accelerate and with it BMO Research expects a weaker dollar as capital increasingly moves away from the safety of the treasury market."
Helen Henton, head of commodities at Standard Chartered, said: "Investment demand for gold is still very strong, and that is going to help drive the price higher over time.
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