Gold ripped past $1,900 Monday to a new record, the upshot of enough fears about global wealth-destroying developments to erase any doubts that the world's oldest safe-haven investment remains the world's No. 1 safe-haven investment.
Gold for December delivery, the most active contract traded on the CME Comex division of the New York Mercantile Exchange, hit $1,900.70 per ounce in electronic trading, up from Friday's closing price of $1,852.20.
Gold is now up 33 percent this year and has been in a bull market run for more than a decade.
Expectations that a much-anticipated speech Friday by the head of the U.S. central bank will signal a third round of the Fed buying Treasury assets, evidence last week that the U.S. is dangerously close to a double-dip recession, a sense that euro zone leaders can't decide whether to drop weak members or push hard for a thorough-going financial union as well as efforts by Switzerland and Japan to lower their currencies' value hoisted the price of the yellow metal.
There has been a heavy round of speculation that the Fed could be pushed (into another round of) quantitative easing sooner than thought, as there haven't been any signals of a possible economic recovery, said Pradeep Unni, senior analyst at Richcomm Global Services in Dubai.
With gold being the only safe haven ... which cannot be intervened (in), investors are left with very less choice other than jumping into the chase, despite being late, said Unni.
The more the Fed tries to stimulate the U.S. economy by buying U.S. government bonds the more the central bank risks inflation, which is catnip for gold investors.
Another round of so-called quantitative easing is expected to exacerbate the year-long decline in the value of the dollar, which fell again Monday against a basket of key world currencies.
Gold is still the safe haven, and as long as people fear recession in the U.S. and euro-zone debt problems, gold remains in demand, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, told Bloomberg. More U.S. asset purchases would be bullish for gold. Increasing liquidity will lead to higher future inflation, which is a reason to buy gold.
The strength of the current bull market makes many analysts hesitant to call a top to the rally.
This doesn't feel like a top, said Peter Thomas, business development director for PFG Precious Metals. It's been up every day for the last eight years. Is it going higher? Sure. I believe that numbers (like $1,900) mean nothing any more. The price you're paying is not germane because computers are doing the trading and all they trade is momentum. Computers don't care what the price is. It's just following trends to make this market.