MercoPress. South Atlantic News Agency

Gold price breaks through the symbolic 1.000 US dollars mark

Doubts about the consistency of the economic recovery have sparked gold investment.

Continuing worries about the stability of the global economy and the rally seen in equity markets continued to spark investment in gold on Tuesday with the price breaking through the symbolic 1,000 US dollars mark and touching a new high for 2009.

Gold jumped to a day high of 1,007.1 a troy ounce with the price holding around that level in early trading, as investors once more sought out a safe haven for their cash.

Tuesday's gains leave gold trading at a record level for this year, ahead of February's high of 1,005. It remains off the peak seen in March when it touched close to 1,031 USD.

While the price could go higher still if jitters remain, some experts have cautioned that the current level may not be sustainable.

Leading British economist Roger Nightingale said last week he could see “no justification” for the recent jump in price of gold, and he questioned why it should outperform equities as an asset.

“It is a commodity used in jewellery and as a speculative play, but jewellery demand is not a driver of it (at present), and I don't see why it should be a good performing asset”, he said.

However, others have said that investors may be buying gold now as a hedge against future inflation, which is expected to climb sharply when government intervention into global economies starts to be wound up and interest rates are lifted from current all time lows.

Mark Harris, fund manager in charge of a number of multi-manager portfolios at Henderson New Star, said he could not see a lot of downside risk to gold in the near term.