On Friday gold hit yet another record-breaking high of $1,880+ an ounce, rallying for the seventh straight week, as concern that the global economy is slowing drove equities lower.
The precious metal is on its longest run of weekly gains since April 2007 as worse-than-expected US economic data and Europe’s debt crisis boost speculation that growth will falter.
Since the market downturn on July 22 gold has risen 15.75 percent, while the Dow Jones industrial average has fallen by 15 percent.
“Lack of confidence in the global economy is pushing people towards gold,” Tom Pawlicki, a Chicago-based analyst at MF Global Holdings, said in a telephone interview. “Gold will continue to advance unless leaders are able to resolve the European or US debt crisis.”
Prices gained 6.3 percent last week, the most since February 2009, and 14 percent this month.
In London, the metal is in the 11th year of a bull market for spot prices, the longest winning streak since at least 1920.
“Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world’s current fiscal problems,” Dennis Gartman.
Investors want to protect their wealth from declining equities, depreciating currencies and accelerating consumer prices.
Gold could continue to rise in the short term amid concern about debt crises and slowing growth.
“Medium term, the disorder of the global monetary system and long-term inflation threat will amplify gold’s nature as a currency and an inflation hedge,” said Cai Hongyu, an analyst at China International Capital the country’s biggest investment bank.