Spot gold prices reached record highs yet again today as both the European Central Bank and Bank of England keep rates unchanged amid a deepening euro zone debt crisis.
The precious metal hit new highs for gold priced in dollar, euro, sterling and yen. Spot gold in U.S. dollars reached $1,681.40 an ounce in the New York trading session today. Gold opened the session at $1,659.87.
After European Central Bank President Jean-Claude Trichet’s speech, gold accelerated higher. Investors listened to Trichet admit that the economic recovery in the euro zone is not going as well as expected and the outlook is more grim than ever.
In response to the worsening debt crisis and euro zone interest rates frozen for now at 1.5%, the euro plummeted against the dollar, falling from a high of 1.4263 before the rate announcement at 11:45 GMT to bottom at 1.4110 by 14:15 GMT.
Investors rushed to buy gold, which is perceived as a safe haven investment in times of financial turmoil and when currencies weaken.
Gold is a “hard” asset as opposed to a paper asset and is a better safe haven investment than the Swiss Franc or Yen which are also usually seen as safer investments. However, due to the rate cuts in the past two days in Switzerland and Japan, both these currencies have weakened in value.