Gold hits record high of $1,920 on euro zone fears

The price of gold surged to new record level of $1,920 an ounce on Tuesday over concerns that Europe’s debt crisis will worsen, driving investors to safe-haven assets such as bullion.

Gold increased as much as 1.1 percent to $1,921.15 an ounce, surpassing a previous peak of $1,913.50 reached on August 23 as investors looked to diversify their assets away from equities and some currencies.

“People are losing trust in US dollars, they are trying to avoid cash dollars and that’s why everybody is looking for a safe haven replacement. People want something more secure, which is why we are seeing new records every week for gold and silver,” Mohammed Younis, business development executive at Gold AE DMCC, told Arabian Business.

“It will easily hit above $2,000 an ounce. The currencies, governments and the central banks are no longer controlling it; the high demand is coming from individuals…they are looking for secure [assets]. This year, before December, I see it hitting around $2,200,” he added.

Gold is up 35 percent this year, set for an 11th year of gains, as the debt crisis in Europe, slower US growth and inflation in China have boosted investor and central-bank demand. It marks the longest rally since at 1920.

Gold futures in India, the world’s biggest bullion consumer, gained as much as 0.9 percent to 28,730 rupees ($623) per 10 grams on the Multi Commodity Exchange of India, Bloomberg reported on Tuesday.

Bullion for December delivery on the Shanghai Futures Exchange increased 1.9 percent to an all-time high of 398 Yuan ($62.28) a gram while China’s gold investment demand surged 44 percent in the second quarter from a year ago to 53 tons, the newswire said.

Dubai’s gold traders in August reported a 100 percent rise in the number of customers buying gold bullion. The precious metal has long been seen as a safe haven buy by Asian investors, but traders in Dubai’s gold souqs have reported a steady increase in sales across all nationalities.

“Traditionally Indian people bought more gold but now almost every nationality I can think of has bought gold bullion,” said Chetan Dhakan of National Jewellery.

“I would say in the past six months it has least doubled; before I used to get one or two customers [buying bullion], now it’s at least four to five customers per day,” he added.

Dubai Multi Commodities Centre Authority on August 15 unveiled a prototype of the UAE’s first gold bullion that it hopes will eventually serve as legal tender. 

“This gold bullion coin was conceived to satisfy the demands from investors seeking access to gold as protection against the ongoing global economic uncertainty,” Ahmed Bin Sulayem, executive chairman of DMCC, said in an emailed statement.

The centre is in discussions with the UAE Central bank to designate the coin as the first legal tender in the UAE and Middle East.

The Dubai Gold and Commodities Exchange said its year-to-date volumes had surpassed the two million contracts mark on August 12, 2011, the first time since its inception.