Gold surges to all-time high

by Aaron Smith and Hibah Yousuf, staff writers


NEW YORK (CNNMoney.com) -- The price of gold surged to an all-time high for the second straight day Friday as economic anxiety continued to fuel a rally for the precious metal.

Gold for August delivery climbed $9.60, or 0.8%, to settle at a record $1,258.30 an ounce, beating the record closing high of $1,248.20 set the previous day.

The contract also set a record for intraday prices, at $1,263.70. The previous mark was $1,254.50, set June 8.

"I would attribute this latest surge in the price of gold to expectations of political calamity that could lead to considerable economic distress," said John Lonski, chief economist for Moody's. "The jump in the price of gold betrays a lack of confidence in global political and economic leadership. It may not be well-founded, but that's what it's telling me."

Lonski added that this rally is unusual because inflation is well under control. "In the U.S., you have more reason to be concerned about price deflation than inflation," he said.

Many investors view gold as a hedge against inflation because tangible assets such as precious metals tend to hold value better than other types of investments. In addition, gold is often seen as an alternative to paper currencies, which can gain or lose value based on changes in monetary policy.

But inflation remains tame, suggesting that concerns about the outlook for global political and economic events are driving the current rally.

On Thursday, the Labor Department reported that the Consumer Price Index was up 2% for the year, an indication that inflation is under control.

But gold is still far from its real record, as measured in dollars adjusted for inflation. Gold prices hit their true peak on Jan. 21, 1980, with a price of $825.50 an ounce. That translates to an all-time peak of $2,185.75 an ounce in 2010 dollars. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.95%3.94%
15 yr fixed3.05%3.02%
5/1 ARM3.34%3.48%
30 yr refi4.02%4.01%
15 yr refi3.13%3.10%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,135.72 38.82 0.21%
Nasdaq 4,982.81 15.67 0.32%
S&P 500 2,101.04 2.51 0.12%
Treasuries 2.11 -0.01 -0.52%
Data as of 6:25am ET
Company Price Change % Change
Bank of America Corp... 16.00 0.16 1.01%
Apple Inc 126.41 -2.13 -1.66%
AbbVie Inc 56.86 -3.41 -5.66%
Avon Products Inc 9.05 -0.05 -0.55%
General Electric Co 25.82 0.16 0.62%
Data as of Mar 5

Sections

The company Allstar allegedly lured customers in with misleading TV commercials and then overcharged them. More

Wage growth has become the central focus of the economy's health. It will impact workers and investors. More

Frank & Oak, Airbnb, and Net-a-Porter are just a couple of companies investing in the antiquated medium. More

Lawmakers and consumer advocates are speaking out against the special treatment given to debt collectors hired by government agencies across the country. More