Gold soars to record near $1,900 an ounce

Spot gold surged more than 1 per cent to a third consecutive all-time high on Monday, as investors fled to the safety of bullion amid fears of another US recession and the euro zone’s debt crisis.

Spot gold struck a record at $1,888.90 an ounce, after staging its biggest weekly gain in two-and-a-half years last week. It traded at $1,888.76 by 0640 GMT.

US gold jumped more than 2 per cent to an unprecedented $1,895.3.

A murky economic outlook given a persistent flow of weak macro data out of the United States and fears about the euro zone’s fiscal health have propelled gold up by more than a quarter since July.

“We are not expecting anything supporting the US economy or the macro data for at least a couple of months,” said Tom Price, Global Commodity Analyst at UBS.

“Europe we regard as even weaker. We are thinking $1,900-$2,000 over a very short period of time is a likely target.”

Investors are waiting for signs of further stimulus from the US Federal Reserve when bankers gather in Jackson Hole, Wyoming, late this week, one year after Chairman Ben Bernanke launched a second round of quantitative easing to revive the economy.

Additional bond purchase by the Fed could raise the inflation outlook and further boost gold, but many view the chances of a third round of quantitative easing as limited and expect the Fed to take gradual measures to boost the economy.

Technical analysis suggested that gold could pierce through $1,900 over the day, said Reuters market analyst Wang Tao.

Holdings in the SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, rose to 1,290.762 tonnes by Aug. 21, the highest in a week and half.

But speculators scaled back their bullish bets in US gold futures and options for a second week last week, as bullion’s rapid rally prompted some investors to liquidate positions, data showed.

“Key resistance in gold will be found at $1,946. However, the market may need an extraordinary event to take it above that level,” said MF Global in a research note.

Other precious metals tracked gold’s strength. Spot silver rose as much as 2.5 per cent to a three-month high of $43.93, extending a 10-per cent rise last week — its best week since December.

Spot platinum hit a three-year high of $1,890.25, on course for its 10th consecutive session of rise.