Gold surges to all-time high

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.