As the price of gold hit another record high as worries grew that the global economy may hit a new recession. Gold alone has more than doubled since the recession began back in 2007 as the debt crisis continues to grow.
2:29PM BST 18 Aug 2011
The price of gold hit a record high on $1,865.40 an ounce early on Thursday as demand for the safe haven investment rose on resurgent worries about a possible new recession for the global economy, analysts said.
Gold's surge was triggered the prospect of recession in the US and Europe which saw investors dump stocks and buy bonds and the precious metal.
Gold prices have more than doubled since the recession began in late 2007. They've risen about 19 percent since the beginning of June, as European leaders struggled to keep the debt crisis from infecting the region's major economies and US politicians nearly drove the country to the brink of default, prompting Standard & Poor's to cut the country's AAA credit rating.
Morgan Stanley on Thursday cut its forecast for global economic growth for this year and 2012, saying the U.S. and the 17 countries that use the euro were "hovering dangerously close to a recession."
While gold has hit a series of record highs over the past 2 ½ months, the Standard & Poor's 500 has dropped about 15 percent, while the dollar, a traditional safe haven during periods of market turbulence and fear, is flat against a group of six major currencies.
The metal's value, unlike that of a currency, doesn't depend on the health of a single country's economy. Its swift rise has made it popular with investors seeking big returns, as well as presumed safety from turbulent financial markets.
The metal's price could go higher. BofA Merrill Lynch commodities analyst Francisco Blanch on Thursday raised his price target for gold to $2,000 an ounce. Just a week ago, he'd set a $1,700 target. He cited the trend of central banks in emerging countries switching more of their currency reserves into gold.
"Physical gold is the ultimate collateral because it has no credit risk," Mr Blanch wrote in a note to clients.
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