Gold price jumps above $1,700 a troy Ounce

(From the ft.com) Gold jumped to new nominal record levels, rising above $1,700 as investors piled in following the S&P downgrade of US debt. The bullion hit a new record of $1,714 a troy ounce in late Asian trading, although it fell back in Europe amid buying by the European Central Bank of Spanish and Italian bonds, trading up 2.3 per cent $1,700.65 an ounce.

Gold prices have been fuelled by increasing fears of sovereign debt defaults and expectations of further monetary easing in the US. Meanwhile, a further boost has been seen from investors deterred from putting funds into other haven favourites, the Swiss franc and Japanese yen, after recent government interventions to weaken the currencies.

Goldman Sachs backed that view on Monday, raising its 12 month target for bullion from $1,730 per ounce to $1,880 an ounce. The bank said it expected prices to continue to climb in 2011 and 2012 given the current low level of US real interest rates and the rise in debt worries. Although it had expected prices to peak in 2012, it now expected bullion to rise through 2012.

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