Forexpros – Gold futures rallied to a fresh record high for a second day on Tuesday, as mounting worries over the outlook for global economic growth and sharp losses in global equity markets underlined the safe haven appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,755.95 a troy ounce during early European trade, jumping 2.05%.
It earlier rose as much as 2.9% to trade at an all-time high of USD1,774.65 a troy ounce, eclipsing the previous high of USD1,724.45 a troy ounce it hit in the previous session.
Gold prices have climbed to record highs in 12 of the past 20 sessions.
Concerns over the global economic recovery were exacerbated after a report from China’s National Bureau of Statistics published earlier showed that consumer price inflation rose by a seasonally adjusted 6.5% in July, the fastest increase since June 2008.
The stronger-than-expected inflation data fuelled speculation that the world’s second largest economy was not done tightening monetary policy.
Meanwhile, demand for safe haven assets was boosted in the wake of a massive overnight sell-off on Wall Street, with the Dow Jones Industrial Average suffering its sixth-biggest drop on record on Monday.
Elsewhere, JP Morgan said in a report on Monday that it expected gold prices to surge to USD2,500 an ounce by the end of the year, citing the U.S. debt downgrade, up from a previous estimate of USD1,800, which the bank called “too conservative”.
The report came after fellow Wall Street investment bank Goldman Sachs raised its three-month average gold price forecast to USD1,645 an ounce, up from a previous estimate of USD1,565 an ounce.
Goldman also raised its six-month price forecast by 5.5% to USD1,730 an ounce and its 12-month price forecast to USD1,860 an ounce, up 7% from a previous projection.
Elsewhere on the Comex, silver for September slumped 1.18% to trade at USD38.59 a troy ounce, while copper for September delivery jumped 1% to trade USD3.971 a pound.
Later in the day, the Federal Reserve was to announce the federal funds rate. The announcement will be followed by the bank’s rate statement, which could provide hints regarding further monetary easing.
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