The price of gold hit new peaks in world bullion markets on Thursday (27 December) touching five hundred and seventeen dollars an ounce at one point in a new surge reflecting heightened international economic and political fears.
The price of gold hit new peaks in world bullion markets on Thursday (27 December) touching five hundred and seventeen dollars an ounce at one point in a new surge reflecting heightened international economic and political fears. The U.S. dollar also slipped slightly on foreign exchange markets, some still working only part time after the Christmas holiday.
SYNOPSIS: As the 1970s draw to a close the price of gold can be seen as one of the decade's spectacular economic upheavals. Less than ten years ago gold was held at an official thirty five dollars an ounce; that was a price established before the second World War when the American dollar was seen as firm and secure.
The release of gold onto a 'free' market coincided with a western recession, skyrocketing energy bills and a decline in American's power to influence foreign affairs. 1979 has been the year in which gold has experienced its largest price rises. Since the beginning of the year gold has risen by two hundred and ninety dollars. This despite the continuing monthly auctions by the International Monetary Fund and more recently those by the American Treasury.
As the American dollar has plunged investors have turned to gold. And it has not been just the financial experts, taking an interest in gold, the man in the street can now buy South African Krugerrands, Canadian maple leafs and British sovereigns. The dollar has been weakening on the world money markets since President Carter's energy speech of July (1979). As the dollar fell the gold rush started, with buyers seeking a secure alternative to paper currency.
The city of London has one of the world's most important bullion markets. Trade here has reflected the general anxiety in foreign exchange circles as the dollar plunged in value against the British pound and other European currencies.
Although Britain is a centre for world trade in gold, it too is suffering economic difficulties. But these have not been reflected in the value of the pound abroad, which has been bolstered by confidence in North Sea Oil.
But Hong Kong was the major world market where the price of gold has continued to set new records. During the year there have been reports of people fighting to buy gold in Hong Kong and harassed dealers had to struggle to cope with the demand. After the latest price hike on Thursday (27 December) dealers said they expected further increases in the price of gold, the traditional hedge in times of uncertainty, because of the unresolved Iranian crisis and fears of further oil price rises. Thursday's increase was mainly attributed to fears of an American-Soviet confrontation over Afghanistan.
Finance experts say in the short term there appears to be little to under-mine gold. But the experts warn when any reaction does come, it could be sharp before gold resumes its upward trend.