Gold surges past $1,900 mark

Steve Dinneen
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GOLD spiralled past the $1,900 mark in after-hours trading last night, setting yet another record high for the safe-haven asset.

It reached a peak of $1,917.90 on the futures market before falling back slightly.

Spot gold also reached the milestone, with the sputtering global economy boosting expectations for further monetary easing and raising bullion’s appeal as a hedge against inflation.

The precious metal had closed a whisker short of $1,900 after gaining two per cent during the day’s trading. The S&P 500 Index rose just 0.4 per cent. Its value has increased six per cent in just three days and 15 per cent so far this month, contributing to a $400 (£243) price hike since July.

All eyes will now turn to Fed chairman Ben Bernanke, who will deliver a key speech on Friday, which will be scrutinised for any signs of Fed policy direction.

At the same meeting a year ago, Bernanke announced a $600bn bond-buying programme that sparked a rally in gold.

Analysts say anything short of a third round of quantitative easing would likely provide limited support for gold as the Fed had already vowed to keep interest rates low into 2013.

Standard & Poor’s metals equity analyst Leo Larkin said: “Gold is driven by the expectation that at some point inflation will come back, and a continuation of people looking for a safe haven beside just the US treasury bonds.

“It’s still susceptible to a pretty big pullback as things are overdone based on technical indicators.”

Spot gold was up 1.6 per cent at close of play yesterday, building on its strongest one-week rise since February 2009. It is one of this year’s best-performing assets, now up 33 per cent.

US gold futures for December delivery had closed up $39.70 at $1,891.90 an ounce.

The CBOE Gold ETF Volatility Index, which is often referred to as the “Gold Vix,” spiked 13 per cent to around 33, its highest in nearly two and a half years.

Investors pouring into gold helped push the total assets of the SPDR Gold Trust to $76.7bn, making it the largest exchange-traded fund in the world for the first time.

The gold trust, which owns physical bars of gold kept in vaults, surpassed the $74.4bn SPDR S&P 500 ETF, which tracks the S&P 500 stock index, as of the market close.