Gold prices topped a record $1,500 for the first time ever on Tuesday, shattering a psychological barrier.
Gold futures for June delivery hit an intraday record of $1,500.50 an ounce near midday, before retreating to settle at $1,495.10 an ounce — also a new record.
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The spike comes amid a wave of market uncertainty that has sent investors looking for an alternative to the weak U.S. dollar. And gold has been the marquee beneficiary.
On Monday, it was a dour outlook on U.S. debt that sent gold prices higher.
Standard & Poor’s lowered its outlook for America’s long-term debt to “negative” from “stable,” based on uncertainty surrounding the nation’s fiscal problems.
That’s the type of news that creates a flight to safe haven assets like gold.
The price of gold has tracked steadily higher in recent months, as unsettling world events created uncertainty in global markets.
Since the start of the year, investors have been forced to consider the implications of a Japanese tsunami, earthquake and nuclear disaster in addition to a spike in crude prices and a slew of revolts in the Middle East and North Africa.
Inflation, against which gold is often used as a hedge, has been rising sharply in emerging economies and is becoming more of an issue in Europe.
Carlos Sanchez, director of commodities management at New York-based CPM Group, said prices could go as high as $1,550 in the next couple weeks as investors focus on political gridlock in Washington.
The next major event for the gold market is the May deadline for the government to raise the debt ceiling, Sanchez said.
On Tuesday, silver prices were also on the rise. It settled at $43.75 an ounce, a three decade high.
Gold’s price of $825.50 per ounce on Jan. 21, 1980, however, is $2,211.65 in today’s dollars, according to the Minneapolis Fed Calculator.