Gold Continues to Nick Up to New Record Highs

Gold prices on Wednesday registered yet another historic high, nearing $1,186/ per troy ounce, with $1,200/oz now in sight, being the next target, as a weak greenback and inflationary fears fueled demand for the yellow metal. Gold for December delivery rose as high as $1,185.90/oz on Globex. That’s a $20.1/oz , or 1.7%, gain from the prior day’s settlement.

Today’s further gold strength was seen on speculation that the Reserve Bank of India will consider buying the IMF’s remaining stash of 201.3 tons.

The price of gold has rocketed since the start of November when India’s central bank bought 200 tonnes of the metal  at a spot price of $1,045 from the International Monetary Fund. The Central bank is now considering buying the rest as gold inches towards $1,200.

There’s been a lot of talk lately about asset bubbles and the carry trade.  According to Jeffrey Nichols, a Senior Economic Advisor to Rosland Capital, “the surging gold price is anything but a bubble“.

Nichols believes the surge is built on the same fundamental factors that have supported a rising gold price in the past: “easy money, low real interest rates, unbridled growth in Federal debt, diminishing faith in the U.S. dollar, rising geopolitical tensions, and global economic policy discord.” Nichols also thinks that ultimately, “when the bubbles do burst, gold will benefit still more as investors seek a safe haven from turmoil in other markets.”

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Charts: Kitco

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