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 fixed3.84%3.77%
15 yr fixed3.02%2.95%
5/1 ARM3.10%3.01%
30 yr refi3.91%3.84%
15 yr refi3.11%3.05%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,020.62 -49.78 -0.28%
Nasdaq 4,965.14 -51.79 -1.03%
S&P 500 2,102.79 -11.70 -0.55%
Treasuries 2.18 0.05 2.20%
Data as of 12:21pm ET
Company Price Change % Change
Bank of America Corp... 16.48 0.04 0.24%
Apple Inc 126.67 -2.03 -1.58%
Regions Financial Co... 9.98 0.00 0.05%
Microsoft Corp 47.92 -0.33 -0.67%
Intel Corp 32.82 -0.37 -1.11%
Data as of 12:05pm ET

Sections

Video game developer EA is one of the hottest stocks on Wall Street. It has a Star Wars game coming out in November and it's also minting money from sports games like Madden and FIFA. More

President Vladimir Putin announced a new reserve fund for the BRICS nations that could attempt to rival the IMF. More

Harrison Brammell is an 11-year-old fifth grader who is obsessed with coding and live-streaming. And he's good too. More

The London-based startup is on a quest to democratize access to technology and coding with its computer company. More

Lack of wage growth and career opportunities along with long hours are most likely to make someone say "Sayonara, boss," according to a new global survey of full-time employees. More