GOLD prices hit a fresh record high yesterday, in the wake of Moody’s warning that the US government may lose its top credit rating.
“This is more about fear, about the dollar, the debt troubles in Europe, as well as the possible downgrade of the US credit rating by Moody’s,” said Commerzbank analyst Eugen Weinberg. “For gold, this is [one of] the best times.”
Spot gold touched a record $1,594.16 (£988) an ounce, despite Federal Reserve chairman Ben Bernanke appearing to backtrack over his hints that a further period of quantitative easing (QE3) could be in the pipeline.
Oil prices also declined, while the US dollar trimmed its losses following Bernanke’s comments.
“We are not prepared at this point to take further action,” Bernanke said. The Fed chairman has raised the spectre of QE3 on Wednesday during testimony to Congress in Washington DC.
A continued period of stagnation and embedded unemployment in the US would prompt the Fed to embark on fresh asset-buying, he had said. But yesterday Bernanke admitted that this scenario was not yet in his reckoning, also alluding towards inflationary pressures.