By Barbara Zigah
With the U.S. Dollar slipping ever lower against most major currencies, gold and other precious metals are surging to new record highs. In Thursday trading, gold sold at $1,375 an ounce, a gain of nearly 2%, and in trading today in London, gold continued to rise, selling at $1,377 per ounce, up .4%. Silver is also trading at its highest level in more than 30 years, selling at $24.2425 per ounce, a 1% rise. As long as the U.S. Dollar continues to be under pressure, and with additional QE measures by the FOMC almost a certainty, investors will look to precious metals as an alternative currency, and not just as a hedge against inflation.
While many investors are concerned over the possibility of a gold bubble, they have no intention of slowing the pace of their investment in gold, at least until there's evidence that global economies are finally showing signs of a rebound. Quite a few investors remain sceptical that forex, equities and other financial instruments will stabilize any time soon, and they view gold as a commodity that will hold its value, irrespective of markets' volatility.
Demand for gold isn't being driven up strictly by investors looking for a currency alternative, however. Physical sales of gold to Indian buyers ahead of next month's Diwali festival, where gold coins are a traditional gift, has also helped to drive up the commodity's price. Even Indian investors are seeing the value of gold as more than just intrinsic.
Analysts see a rise in gold up to $1,400 per ounce and higher, with the yellow metal well supported at least until the next meeting of the FOMC in early November. And whether the gold bubble will break eventually is not a question, the question is what will be the price of Gold by then?