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Gold rallies to record high of USD1,895 on global concerns

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Forexpros - Gold futures rallied to a fresh record high for the third consecutive day on Monday, hovering close to the psychologically important level of USD1,900 an ounce as lingering concerns over the global economic outlook boosted demand for safe haven assets.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,886.65 a troy ounce during European morning trade, jumping 1.84%.

It earlier rose as much as 2.5% to trade at an all-time high of USD1,895.65 a troy ounce, eclipsing Friday's high of USD1,878.35 a troy ounce.

Concerns over the outlook for U.S. economic growth as well as lingering fears over the euro zone's sovereign debt crisis continued to weigh on risk appetite and bolstered demand for safe-haven assets.

German Chancellor Angela Merkel said in an interview over the weekend that the introduction of euro bonds was "not the answer" to solve the region's debt crisis.

She added, "The markets want to force us into doing certain things and that we won't do. Politics cannot and will not simply follow the markets."

Gold is considered a refuge from financial risk and a haven against economic and political uncertainty.

Markets were also looking ahead to the Federal Reserve's annual policy retreat in Jackson Hole, Wyoming later in the week, at which Fed Chief Ben Bernanke could announce additional measures to support the U.S. economy.

In its most recent statement on monetary policy released on August 9, the Fed indicated that it "discussed a range of policy tools available to promote a strong economic outlook recovery" and said it was prepared to employ the tools "as appropriate".

The statement fuelled 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.

Elsewhere on the Comex, silver for September rallied 1.95% to trade at a three-month high of USD43.78 a troy ounce, as investors sought a cheaper alternative to the yellow metal.

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

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