MercoPress. South Atlantic News Agency

Gold surges to a new all time high of 1.274,75 per ounce

Investors fear a double dip recession and gold is the natural refuge

The gold price surged to a new all-time high on Wednesday driven by a weaker dollar and its safe haven appeal. The precious metal was up almost 2% at $1,274.75 per ounce, surpassing the previous record of $1,265.30 struck on June 21.

The gold price is now up 16% since the start of the year as investors continue to take fright of the stock markets amid fears of a double-dip recession.

Analysts also point to heavy central bank buying, particularly in Asia, squeezing demand as they look to diversify away from Treasuries and other paper assets.

In the first quarter, central banks became net buyers of gold for the first time in 20 years in a trend that is expected to continue. The central bank of Bangladesh bought ten tons of the precious metal last week and China has also being upping its stocks.

Figures from the World Gold Council show that total demand for gold rose by 36% to 1,050 tons in the second quarter, while demand for investment soared by 118% to 534.4 tons.

Reflecting investors’ appetite for the commodity, ETF Securities’ GOLD ETC has seen inflows of 587 million USD in the last six weeks alone. Angelos Damaskos, manager of the Junior Mining fund, said: ‘It is clear that with the current macro backdrop there is a lot of demand for gold and this could very easily push prices higher”.