Gold climbs higher and higher

The yellow metal soared to a new record of $1,795 an ounce this week. It has gained 16% in the last month and 550% since its bull market began ten years ago. Gold has reached new all-time peaks in euro and sterling terms too, eclipsing £1,100 and €1,250. Demand for physical gold is so strong that "London is very close to being out of [vault] space", a banker told the FT.

What the commentators said

"Everything the gold bulls predicted is coming true," said Matthew Turner of Mitsubishi. Demand for the safe haven and store of value has rocketed amid fears of recession, a potentially disastrous eurozone break-up and dwindling confidence in governments' creditworthiness. And "most central banks see the solution as expanding the money supply".

Japan, Britain and the US have already printed money, and there could be more to come in Britain and America. With major currencies being debased by quantitative easing, or threatening to collapse, gold is being viewed not just as a refuge from turmoil and inflation, "but increasingly as an alternative currency' too", noted Commerzbank. "It is likely to remain in demand despite the high price."

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Real interest rates remain historically low, stoking fears of inflation and lowering reduces the cost of holding gold, which pays no interest. Emerging market central banks are buying gold in order to diversify their currency reserves. In Asia, mounting wealth and fears of inflation have meant that "gold is finding favour as a means of wealth preservation", said Jack Farchy in the FT. Add in the fact that debt and growth worries are unlikely to recede soon, and gold's bull run is far from over.