Gold price hits all-time high on European debt crisis and US QE

The gold price hit an all-time high on Wednesday, as the euro crisis deepened and on the prospect of more quantitative easing in the US.

The price of gold for immediate delivery hit a record $1,578.55 on Wednesday evening. Gold is priced in dollars, but it also hit a record in sterling, the euro and the South African rand.

Moody’s downgrade of Ireland’s debt to junk status combined with minutes from the Federal Reserve's last meeting of its open markets committee to send investors fleeing to safety. Gold is a pseudo-currency as many investors regard it as a hedge against devaluing currencies.

EU leaders are expected to hold an emergency meeting on Friday as the prospect of some form of Greek default rises.

The Federal Reserve minutes showed the US central bank was contemplating further quantitative easing, known as QE3, a process which could cause the dollar to fall further. This was gold's eighth consecutive day of gains – something not seen since October 1996, when there were five consecutive days of rising prices.

“Gold will keep rising for the next five years, even if it has some crests and troughs,” Michael Widmer, an analyst at Bank of America-Merrill Lynch, said. “Those holding gold should hold on to it, while others should probably get their hands on it as it is going to be on an upward trend,” he added.

Gold is up about 11pc this year and it is on track for its 11th consecutive yearly rise. This would be the longest winning streak since at least 1920.

 Source.