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Price of gold rises above $1,600

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by Kay Mitchell
”Price

The price of gold has risen to a fresh all-time high of $1,610 an ounce on the back of US and euro zone debt worries.

As debt concerns in the US build, the dollar continues to weaken and the price of gold typically moves in the opposite direction to the precious metal.

Some believe gold will continue its rally, while optimistic investors see it reaching as high as $1,700 an ounce by December.

The surge in the price of gold has been linked to ratings agency Moody’s reviewing the US’s AAA debt rating, warning there was a growing likelihood the US will default on its debt obligations.

Chairman of the Federal Reserve, Ben Bernanke, has previously warned that the US defaulting on its debt would cause a “major crisis”.

US politicians continue tense negotiations to reach an agreement on a deficit reduction programme.

Furthermore, ongoing debt fears in the euro zone are making markets nervous as the likelihood of Spain and Italy being forced to seek a bailout increase.

Better than expected results of EU stress tests have failed to sooth market jitters and stocks have fallen in the last few days.

A summit will take place later this week in Brussels where euro zone leaders will, again, try to prevent the debt crisis from spreading.

Meanwhile, the price of silver continues to rise – to above $40 an ounce – the highest price for 10 weeks.

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News posted: July 19, 2011

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