Spot gold prices broke through previous highs and smashed records in several currencies during London trading on Tuesday, reaching $1,251.85 per ounce and 1,050.86 euros per ounce.
Continuing uncertainty about the sustainability of European sovereign debt and a new warning from the Fitch rating agency that Britain faces a fiscal crisis weighed on investor demand for the euro and pound.
The movement in spot gold prices was driven by perception that the metal will be a hedge against instability and inflation, while demand for physical gold bars actually fell as India, the world’s largest consumer of gold, bought less gold in response to soaring prices.
“The gold price continues to be supported by safe-haven inflows, linked to Europe’s debt crisis and uncertainty about returns from alternative investment assets,” said David Moore, a commodity strategist at Commonwealth Bank of Australia, to the Bloomberg News Service.
In Guatemala, the Inter-American Commission on Human Rights called on the government to close the Marlin mine owned by Goldcorp, the world’s second-largest gold producer by market value. There is no word yet on how the government will act, but a closure could lead to further contractions in the physical supply of gold.
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