Gold price breaches $1,800

Gold price breaches $1,800

The price of gold has smashed through the $1,800 barrier, hitting $1,814 an ounce.

Stock market volatility and fears over the US and eurozone pushed the price of the yellow metal up in early morning trading on Thursday.

It has since retreated to around $1,740.

The gold price has been breaking records almost every day after global stock markets started plummeting at the end of last week. On 9 August the gold price hit a new high of $1,778 an ounce.

Angelos Damaskos, fund advisor to the Junior Gold Fund, comments: ‘Gold is now reaching for new highs as investors seek a safe-haven.’

Many experts forecast the gold price to continue to surge upwards as economic and market worries persist.

Damaskos believes gold mining company share prices will also rise. He says there is a wide disparity between the share prices of gold miners and the price of gold.

‘We believe that gold shares currently discount a long-term price of about $1,000 per ounce, which, given the strength of gold, cannot go on forever,’ he says.

‘Since 2005 when gold broke above $500 per ounce, the Philadelphia Gold Mining Index is up only 91 per cent, compared to a rise of 184 per cent in the gold price. Contrast this to the last great US financial crisis in the 1930s when gold went up 46 per cent, but shares in leading gold mining company Homestake Mining rose by 1,400 per cent. If history repeats itself gold mining stocks could have a large rerating ahead.’

Meanwhile, European stock markets rose early this morning, but have since reversed their gains. London's FTSE 100 index, Germany's Dax index and France's Cac 40 are now trading broadly flat.

The biggest winner today on the FTSE 100 is Essar Energy, which is up 2.6 per cent. Smiths Group has seen the biggest falls though, down 2.4 per cent.

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