Gold prices soared above $1,500 an ounce on Wednesday, setting a new all-time record, even as the precious metal sustained a superb run banking on its value as the preferred safe haven investment in uncertain times.
In tandem with gold's rise, the value of the U.S. dollar slipped on Wednesday. A dollar Weakness spurs gold prices by enhancing the yellow metal's value as a safe haven asset.
Spot gold traded at $1,505.21 an ounce and was bid at $1,505.16 an ounce at 5:42 a.m. ET, against $1,493.90 late in New York on Tuesday, Reuters reported. Meanwhile, the European common currency spiked to a 15-month high against the dollar on Wednesday.
The crisis of confidence which the global economy has been going through has been exacerbated by the Japanese nuclear crisis, the Middle Eastern upheavals and the runaway rise of oil prices, resulting in a virtual gold run for gold and silver.
Trading above $1,500 means that gold prices have registered a manifold jump from a lowly $265 at the start of the decade.
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The Standard Chartered bank report said gold prices could reach $2100 by 2014 per ounce and that as high a price as $5000 per ounce by the end of the decade is possible. The bank said gold prices are yet to hit the super cycle as demand from the emerging economies like China and India will scale to peak levels later in the current decade.
However, analysts have pointed out that gold's advance into what is termed as a super cycle does not bode well for the US economy.
A sustained gold and oil boom indicates that the dollar is slipping into grave danger and the economy closer to collapse, according to Daily Markets analyst Michael Snyder.
... when these commodities go up in price it is a sign that the U.S. dollar is dying and that our country is getting closer to economic collapse, Snyder wrote recently.
He explained that when the gold and silver prices soar, it indicates that investors everywhere in the world are losing trust in the dollar and the U.S. government treasuries. And they seek out something they can trust more.
The U.S. has been running trillion dollar deficits for several years now, and this has created a lot of new money. And he says the rest of the world is now seriously doubting the sustainability of U.S. government debt.