The gold price

By THIS IS MONEY
Updated:

 

The Daily Mail City team examines the recent surge in the price of gold and looks at where it may go from here.

On the way up again?

Yes. The price hit a red hot $1007 an ounce in early trading yesterday and is within touching distance of its all-time high of $1030.8 - achieved in March last year.

Why?

In the past 18 months turbulent markets, falling share prices and investors' desire to find a safe haven for savings have forced up the price of the precious metal.

But, as you may have spotted, the world is starting to emerge from recession, the Footsie and the Dow are reclaiming ground lost last year and consumers have started to regain their confidence.

So why the latest surge?

Inflation. This is the new terror keeping economists and finance ministers awake at night. Having spent billions of pounds bailing out the banks and jumpstarting ailing economies, the fear is Britain, America and the rest of the developed world have placed a rocket under prices.

The prospect of a 1970s-style bout of inflation has sent people scurrying for gold as means of wealth preservation. Near zero interest rates make it an even more popular investment.

So how high will it go?

One analyst predicts the next stop is $1,500 an ounce. But he says at this prohibitively high price, retail gold sales (43% of current turnover) may dry up.

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