Gold prices 'continue to rise'

Those whose interests lie in alternative investments may be pleased at the news today that spot gold has risen to a record high of $1,090 per ounce.

On Wednesday at 01:15 GMT, it was bid at the price of $1,091.05 an ounce, compared to a high of $1,084.50 in New York on Tuesday.

Increased buying of the commodity was spurred on by the announcement that the International Monetary Fund (IMF) sold 200 tonnes of gold to India’s central bank earlier this week.

Michael Kempinski, a senior trader at Commerzbank, commented that the market soon realised that ’there are enough central banks which are looking to buy the gold from the IMF direct and so it is not coming into the market, so the shorts had to cover’.

Mr Kempinski went on to predict that prices will soon rise to $1,100 per ounce.

This news comes after a former adviser to the People’s Bank of China was quoted by Reuters as saying that it would be cheaper for the Asian nation to buy gold mined domestically than to purchase it from the IMF.

Jeremy Beckwith, chief investment officer at Kleinwort Benson, commented: ’The fact that gold rose five per cent to a new all-time high last week shows that the precious metal has clearly broken through the $1,000 level and it remains in a bull market.

’Key factors for the rise last week were the purchases by India and Sri Lanka of gold from the IMF, and continued weakness in the dollar.

’On a more bearish tack, although the UK announced a further £25 billion of quantitative easing (QE), the US slightly reduced their QE target and European Central Bank president Jean-Claude Trichet hinted that the extraordinary liquidity measures seen in 2009 were unlikely to be necessary in 2010.’

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