Gold hits record above $1300 , silver at 30-year peak

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http://news.yahoo.com/s/afp/20100924/bs_afp/commoditiesgoldsilvermetalsprice

Gold hits record above $1300 , silver at 30-year peak

by Roland Roland – Fri Sep 24, 12:03 pm ET

LONDON (AFP) – Gold soared to a record high above 1,300 dollars on Friday,

dragging sister metal silver to a 30-year peak as investment demand propelled

precious metals higher.

Gold prices struck a record 1,300.07 dollars an ounce in afternoon trade on the

London Bullion Market as investors sought a safe-haven for their money amid

increased uncertainty over the global economic outlook.

Silver, meanwhile, jumped to 21.44 dollars an ounce -- its highest level since

September 1980.

" The underlying bullish trend in the gold market continues to be fuelled by the

high level of uncertainty regarding the United States and European economies, "

said SEB Commodity Research analyst Filip sson.

" Wealth preservation are the keywords. As long as we do not see a reduction in

the uncertainty regarding the long-term economic outlook, gold prices will

remain well-supported as the currency of choice for risk-averse investors. "

He added that " the strategic view remains bullish (positive) and we expect

prices above 1,350 dollars per ounce before the end of the year. "

Gold and silver were also driven by particularly keen demand from exchange

traded funds (ETFs).

ETFs allow traders to invest money more easily in commodities, without trading

on the futures market. They are traded like shares and are widely regarded as an

inexpensive and low-risk way of investing.

" Gold is fuelled by a combination of things, " said Commerzbank analyst

Briesemann.

" High investment demand can be seen in inflows into gold ETFs, " added Briesmann.

" Some central banks in Asia are also diversifying their currency reserves

further, even at the current high price levels.

" Furthermore, the general interest of investors is not waning and gold is sought

for mainly as a 'stable currency'. "

Gold also won support from the weakening US currency, which makes the

dollar-priced metal cheaper for buyers using stronger currencies and so tends to

stimulate demand and prices.

The European single currency rose against the dollar Friday after a surprise

gain in German business confidence.

Gold gained additional support this week after the US Federal Reserve hinted at

more stimulus spending if the tepid US economic recovery cools further, sending

the dollar reeling.

" The prospect of further US quantitative easing and the resulting decline in the

dollar was the main driver in the gold market during the last week, " said SEB

analyst sson.

Since this time last year, gold and silver prices have soared by about 30

percent.

" Poor man's gold shines again, " said analyst Andrey Kryuchenkov at financial

services firm VTB Capital in response to silver's 30-year high.

Kryuchenkov also noted that silver enjoyed " robust investor demand " and

industrial demand -- the metal is widely used in the manufacturing sector, as

well as to make jewellery.