Gold rushes above $1,000 mark

Concerns about inflation and dollar send safe-haven metal soaring to highest level since February.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Julianne Pepitone, staff reporter

Click the chart to view other commodity prices.
10 countries, 10 solutions
A financial crisis has engulfed countries from the best-off to the worst-off around the world. The solutions to the problem are varied.
What would you do with $10,000?
  • Save it
  • Spend it
  • Invest it
  • Pay down debt

NEW YORK ( -- Gold prices surged past the $1,000-an-ounce mark Tuesday amid investor concerns about inflation and the weakness of the dollar.

The December contract on the New York Mercantile Exchange rose as high as $1,009.70, its highest level since February, before easing back to $1,006.40, up $9.70.

As the economic outlook remains bleak, gold has benefited. It's considered a safe-haven because precious metals tend to retain their value in times of economic stress.

Gold received an extra boost after a United Nations panel's Monday report criticized the U.S. dollar's position as the global reserve currency, said Mark Hansen, an analyst at CPM Group.

Tuesday's prices crossed an important threshold, but gold has been on the rise for months. Investors consider it a hedge against inflation, an attractive quality amid a swelling budget deficit and increased government spending.

"The safe-haven factor is very important," Hansen said. "The [gold] market hasn't fallen off like people expected it to -- like other markets did."

Gold's one-grand history: Gold soared above the $1,000 mark once in February, when investors worried that big banks such as Citigroup (C, Fortune 500) might need to be nationalized.

Before February of this year, the last time gold traded at such high levels was in March 2008 -- surging above $1,000 for the first time in history amid severely volatile financial markets. Gold hit a record high of about $1,014 in as the Federal Reserve and JPMorgan Chase (JPM, Fortune 500) boosted Bear Stearns, which was on the verge of collapsing.

But demand failed to hold prices above the psychological $1,000 mark, and gold tumbled to $720 an ounce in October as commodities markets slipped and the dollar rallied. Prices bottomed in November as the financial system began to collapse, and gold has risen choppily since then.

Outlook: CPM's Hansen said he expects gold prices will firm around the $1,000 mark. Within the next 1-2 months, he said, gold could rise as high as $1,100 per ounce. If Hansen's prediction is right, that would be an all-time record before inflation.

But in real dollars, gold is still well below its inflation-adjusted highs. Prices rose to $825.50 per ounce on Jan. 21, 1980, which is $2,186.50 in today's dollars, according to the Minneapolis Fed Calculator.

"If the gold price cements itself above $1,000, people will be encouraged to buy," Hansen said. "Before, investors might have been concerned prices were too high. A lot more players could be participating in the market soon."  To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

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: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. 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 2018 and/or its affiliates.