Gold prices hit an all-time high as demand surged to the highest
level since the collapse of Lehman Brothers in 2008 amid volatile financial markets in Europe.
Spot gold in London surged to above
$1,230 a troy ounce, surpassing the previous record set in December
last year.
Gold
prices in euro terms also hit a fresh all-time high of €969 an ounce in
late trading in London on Tuesday, up almost 26 per cent since the
beginning of the year.
Traders and coin dealers said buying was
exceptionally strong from German and Swiss investors. In Frankfurt, gold
sellers said that demand late last week was three to four times normal
levels. The spike appears to reflect concerns in Germany about the
potential inflationary impact of the European Central Bank’s decision to
buy up eurozone government bonds in the wake of the Greek debt crisis.
Michael
Kramer, president of Manfra, Tordella & Brookes, a large New
York-based coin dealership, said: “The demand has been huge overseas.
Most of it is ending up in Germany.” Edel Tully, precious metals
strategist at UBS in London, added: “Coin demand is so intense that
supply is struggling to match”.
UBS,
one of the largest bullion banks, said its gold sales desks in Geneva
and Zurich had experienced the greatest demand for coins and small bars
since 2008 last Thursday, when markets were shaken by contagion fears in
the eurozone.The Austrian Mint has sold 108,000 ounces of Vienna
Philharmonic coins in the past two weeks, more than the 89,100 ounces it
sold during the first three months of the year.
Kerry
Tattersall, marketing director at the Austrian Mint, which sells the
popular Vienna Philharmonic bullion coin, said the mint was producing
“as fast as we can”.
“It’s quite a spectacular increase in
demand.” “We’ve put on a third production shift so we’re producing
around the clock,” said Kerry Tattersall, the mint’s marketing director.
Jonathan Spall, a director of commodities at Barclays Capital in
London, said gold was likely to hit a “fresh all-time high before the
end of the week”. Outside the eurozone, dealers said that demand was
also strong in North America.
Holdings in physically backed gold
exchange traded funds are at record highs after some ETFs last week
experienced their biggest inflows in over a year.
Global
investors have been increasingly turning to gold since 2008. Gold
traditionally performs well during times of financial distress or in
times of US dollar weakness.
Global investors, led by the US, last
year bought a record 228.5 tonnes of gold in the form of bullion coins,
up from 77.4 tonnes in 2000, according to GFMS, the London-based
precious metals consultancy.
Gold