Gold rallies to fresh record high, tops USD1,780 an ounce

Shutterstock photo

Forexpros - Gold futures climbed to a record high for the third consecutive day on Wednesday, amid fears over a French sovereign debt downgrade and after the Federal Reserve pledged to keep rates at ultra-low levels "at least" through mid-2013.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,775.45 a troy ounce during U.S. morning trade, soaring 2.2%.

It earlier rose as much as 2.45% to trade at an all-time high of USD1,780.95 a troy ounce, exceeding the previous day's high of USD1,780.85 a troy ounce.

Gold prices have climbed to record highs in six of the past seven sessions.

French President Nicolas Sarkozy met with Bank of France Governor Christian Noyer earlier in the day, as well as with a number of government ministers to discuss the country's economic and financial situation.

The meeting comes amid mounting fears that France's top-tier AAA credit rating could be downgraded if the euro zone sovereign debt crisis worsened.

Meanwhile, the Federal Reserve pledged on Tuesday to keep its benchmark interest rate at an all-time low, adding that it will maintain a loose monetary policy until "at least through mid-2013."

In a statement, the Fed said growth was much slower than expected and the labor market had deteriorated, underlining concerns over the U.S. economic outlook.

The Fed also indicated that it "discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability" and said it was prepared to employ the tools "as appropriate".

The statement fueled speculation the central bank may embark on a third round of quantitative easing, after the second round of bond purchases concluded at the end of June.

Minutes of the Fed's meeting will be published on August 30 and will provide more insight into the policy debate, while Fed Chief Ben Bernanke is to speak at the central bank's annual policy retreat in Jackson Hole, Wyoming on August 26.

Bank of America-Merrill Lynch raised its 12-month gold price forecast to USD2,000 an ounce, citing concerns over sovereign debt levels in the U.S. and the euro zone and weakening global growth.

Earlier this week, JP Morgan, Goldman Sachs and HSBC also raised their price forecasts.

Elsewhere on the Comex, silver for September surged 2.11% to trade at USD38.46 a troy ounce, while copper for September delivery plunged 2.85% to trade USD3.926 a pound.

Forex News

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.