There is no stopping gold. The precious yellow metal shot up to another fresh high of US$1,680 an ounce on Thursday afternoon as investor fears over the declining global economy escalated.
The counter moved as high as $1,681.96 an ounce and by 16:00, gold was trading at US$1,680 or 419.40 an ounce higher than its previous JSE close of US$1,660.64. Gold has gained 19% so far this year and the 11-year bull run has been its longest since 1920.
But good news for gold normally means something is going bad somewhere in the world, Ross Norman of Sharps Pixley in London told I-Net Bridge/BusinessLIVE.
Gold's latest run was fuelled by the latest US jobs data which reported that 400,000 Americans made first time claims for jobless benefits last week and on European Central Bank statements that it would deploy unlimited short-term lending through to the end of the year.
"It is clear that world markets are walking perilously close to a double dip recession and data is being scrutinised given there is less in the Fed's armoury in terms of monetary options this time around," said Norman, who described the bad news on either side of the Atlantic as "ping-pong".
"There appears to be economic news ping-pong being played out across the Atlantic divide, with each player giving the markets increasing concerns over economic stability - all of which is fuelling gold higher," he said.
Sharps Pixley expects the market to have made gains of close to 32% at US$1,850 before the end of the year but it said while it favoured the upside, it was concerned that the bullion market "could turn parabolic" which would not be favourable in the longer term.
Dow Jones Newswires reported that the yellow metal has set a series of records during the last four weeks, as investors sought a safe-harbour from a range of economic concerns.
The contentious negotiations to raise the U.S. borrowing limit went down to the wire, raising the prospect that the country may lose its sterling credit rating.
Worries about euro-zone sovereign debt have also escalated, with Italian and Spanish bond markets flashing warning signs this week. Investors fear rising borrowing costs for both countries could eventually require a round of financial support from the European Union, a taller order than earlier bailouts of smaller economies in Greece, Ireland and Portugal.
The "political and economic barometer is signalling higher gold again," said George Gero, vice president with RBC Capital Markets Global Futures. "Investors fear economic consequences, and continued low interest rates offer few alternatives."
