Gold prices extended earlier gains to hit a new record high at $1,593.73. The precious metal has been steadily rising since July 1st, gaining over $115.
Demand for the safe haven asset has been boosted by concerns of further monetary policy easing by the US Federal Reserve as well as Moody’s warning that the U.S. could lose its triple A credit rating.
Investors are concerned “about the impact that further policy easing by the Fed will have on the dollar” and this will support gold, said Peter Fertig, , the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “The possibility of a U.S. default by not increasing the debt ceiling in time and a possible downgrade is a reason to invest in gold as a safe haven. There is still the risk that the crisis in Europe will prevail further.”
Meanwhile, the US Dollar was knocked down following US Fed Ben Bernanke’s comments on Wednesday that the Fed is prepared to take additional action if US economic growth appears to be coming at a standstill. He acknowledged how detrimental it would be to the financial system if the US Congress fails to raise the debt limit.
A weaker Dollar helps boost gold prices since the tow have an inverse relationship. Spot gold priced in Dollars has advanced 12 percent in this year after climbing for the past 10 years.