Gold surges as investors seek safety

August 8, 2011: 4:21 PM ET
commodities

Click on chart for more commodity market data.

NEW YORK (CNNMoney) -- Gold surged to a new record on Monday, boosted by global market uncertainty in the wake of Standard & Poor's downgrade of U.S. debt.

Gold hit an intraday record of $1,718.02 per ounce -- its first time above $1,700, when not adjusted for inflation.

The price came off its peak before closing at $1,713.20 per ounce. That's $61.40, or 3.7%, higher than the prior session.

Joe Foster, portfolio manager for the Van Eck Global gold mutual fund, said prices are being driven by falling stock markets around the world.

He cited both the S&P downgrade of the U.S. and the European Central Bank's plan to purchase Italian and Spanish bonds. Those moves are stoking concerns about governmental currency and debt, sparking the flight to the precious metal.

"Gold is a sound currency of last resort, and thus the markets want something that will hold its value," he said. "That's why they're moving to gold."

Foster said he is bullish on gold's ability to continue rallying on international insecurity.

"In this current environment, I would say $2,000 [an ounce] is not an unreasonably expectation," he said.

Gold is also still far from its true peak, when adjusted for inflation. The metal hit its real record on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation to 2011 dollars, that translates to an all-time record of $2,261.33 an ounce. To top of page

Index Last Change % Change
Dow 17,778.15 421.28 2.43%
Nasdaq 4,748.40 104.08 2.24%
S&P 500 2,061.23 48.34 2.40%
Treasuries 2.20 0.06 2.61%
Data as of 8:14am ET
Company Price Change % Change
Bank of America Corp... 17.53 0.27 1.56%
Apple Inc 112.65 3.24 2.96%
Oracle Corp 45.35 4.19 10.18%
General Electric Co 25.14 0.71 2.91%
Microsoft Corp 47.52 1.78 3.89%
Data as of Dec 18
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.12%4.00%
15 yr fixed3.14%3.00%
5/1 ARM3.25%3.01%
30 yr refi4.17%4.06%
15 yr refi3.21%3.09%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.