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Gold Sets Record, Retreats, Still Above Previous Highs

July 25, 2011 at 19:29 by Andriy Moraru

Gold prices reached their new all-time high level today and then retreated slightly. They still remain in the zone above the previous record maximum levels, signaling a strong demand for the commodity amidst global financial troubles.

The shiny metal is rising on the uncertainty with the debt ceiling that needs to be raised before August 2 when the United States will have to declare default on its public debt in case no further debt will be issued. Meanwhile, the situation in Europe isn’t much better — Greece’s credit rating was downgraded from Ca to Caa1 with the developing outlook by Moody’s. For the global investors it becomes evident that keeping their funds in anything tightly connected with the currencies or the financial system is currently less safe than in gold.

Debt negotiations by the US authorities are still heading nowhere. But even if the debt ceiling will be raised, it would mean nothing good for the US dollar and consequently will benefit gold, as the Federal Reserve will have to issue more money to support country’s spending. Some experts even project $1,800 per troy ounce as the viable price for this commodity by the end of the year.

Gold rose from $1,598.84 to $1,613.19 or about 0.9 percent as of 19:25 GMT on the spot market today. The record high level that was reached today is at $1,622.76.

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