Silver closes in on magical $50-mark

The price of gold hit a new record high this morning, driven up by a weaker US dollar and continuing tensions in the Middle East and North Africa region.

Spot gold rose as high as $1,517.20 an ounce in early Asian trade on Monday, before retreating a tad and is currently trading at $1516.40 per ounce. Spot silver prices are at 31-year-highs of $49.25 an ounce, within striking distance of the $50.35 an ounce high the white metal made in 1980 when the Hunt Brothers’ attempt to corner the world’s silver resulted in abnormally high prices for the metal.

Individual and institutional investors have been flocking to safe haven precious metals as a hedge against inflation and turmoil since the beginning of the global financial contagion, and recent geopolitical tensions in the MENA region have accelerated their buying behaviour, pushing prices north.

In local UAE markets, the gold rate has surged to an all-time high of Dh182.25 per gram for 24-carat gold while 22-ct is being retailed at Dh171.25/gm this morning. A kilobar of silver is available for Dh5,670.

Silver is now up 45 per cent since the beginning of 2011, and is providing handsome returns to investors across all classes – whether those looking for an inflation hedge or those seeking appreciation in the face of growing industrial demand.

The recent downgrading of US debt outlook by ratings agency Standards & Poor’s has led to many an investor abandoning the US Treasury bandwagon and taking refuge in safe haven metals. Moreover, with Brent crude trading at $124 a barrel, concerns about inflation are rising, adding to the risk of an economic slowdown, further interesting investors in precious metals.