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Gold, Silver, U.S. Dollar

Gold Prices Hit Record High $1,622 with Physical Gold Still the Global Safe Haven Investments

Spot gold prices gained 1.2 percent today and hit a new record high of $1623/oz. The US officials failed to increase the country’s debt limits and also heightened fears over a possible default. This led poor sentiments in the global financial markets which boosted safe-haven demand for gold. On the MCX, gold prices traded higher by almost 1 percent and were hovering at `23,323/10 gms today. Following rise in gold, spot silver gained around 1.6 percent mainly taking cues from a weaker dollar.

Escalating concerns with regard to US debt limits and weak sentiments in the global markets exerted pressure on the base metal prices on the LME today. Strike at Escondida, world’s largest copper mine in Chile, have entered in its fourth day and there is no signs of any solution to the disputes. Copper traded lower by 0.5 percent and touched an intra-day low of $9608/tonne today. But sharp decline was cushioned mainly on the back of supply worries from Chile and a weaker dollar.

Crude oil prices declined almost 1 percent on the Nymex today mainly on account of rising US debt limits concerns coupled with weak global market sentiments. Oil touched an intra-day low of $98.76/bbl and were trading at $99.01/bbl till 4.00 pm IST.

However, on the MCX, crude oil August contract declined around 0.5 percent as Rupee depreciation led minimal decline on the domestic bourses today.


Base metals and crude oil is expected to trade lower today mainly on the back of choppy sentiments in the global markets due to increasing concerns over US debt worries. However, a weaker dollar will cushion sharp decline.

Expect gold to trade higher today mainly due to rising US debt tensions and weak sentiments in the global markets which will fuel safe-haven demand for gold.

Historical Considerations

Since ancient times, humans have been fascinated by gold, silver and other precious metals, and have used them both as currency and to make valuable jewelry and artifacts. In times of war and other strife, people have traditionally converted their savings into metals that they have carried with them to safer places. Precious metals, particularly gold, continue to be regarded as safe haven investments, and as a form of insurance against both inflation and deflation.

The volume of gold trading on the global markets tends to intensify as individuals sense an uncertain economic or political environment. Since 9/11, when the world started to become more unstable in geopolitical terms, the prices of gold and its companion metals have increased dramatically while trading volumes are up sharply, too. Prices have escalated especially fast since 2008, when the world economy entered a crisis period that is still not resolved, and investors flocked to these perceived safe commodities.

With severe and complex economic problems on both sides of the Atlantic, and even China warning that its banking sector might be in trouble, more and more ordinary people are learning to trade silver, gold, platinum and palladium in an attempt to gain control of their own financial security. Many experts recommend holding physical precious metals rather than paper investments such as futures or ETFs (exchange traded funds) on these commodities, particularly in uncertain times such as these.




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