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News // Metal market

Gold Jumps One-Tenth

19 November 2008 , 10:48Jo Amey835
The price of gold has jumped by nearly a tenth since the credit crunch first struck as investors look for a safe haven for their money.

Gold currently costs $729 (£490) an ounce, 8% more than it did in August last year, according to investment group Clerical Medical.

A combination of the uncertainty in the financial markets, rising inflation and the weakening US dollar all helped to push up the price of gold.

By contrast, the price of shares has dived since the problems caused by the credit crunch first emerged.

But the gold price has fallen by 28% in recent months after reaching a record high of $1,012 (£681) per ounce – 59% above its five-year average of $593 (£399) per ounce.

It reached this high after soaring by 32% during 2007, the biggest annual gain during the past 28 years, and significantly higher than the typical growth in commodity prices of 21%.

But the recovery in the value of the dollar, combined with concerns over the impact the weakening global economy will have on demand for gold has caused its price to fall in recent months.

Martin Ellis, chief economist at Clerical Medical, said: “The average price of gold reached a record high in March as investors sought to safeguard the value of their investments against a backdrop of financial market turmoil, rising inflation and a weakening US dollar.

“Gold prices, however, have fallen back since then with the strengthening in the value of the US dollar a key factor behind this reversal".

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