GOLD SURGES TO RECORD HIGH
Gold prices soared within sight of a new record high onTuesday as investors sought a safe-haven investment amid deepening concernsabout the eurozone debt crisis, analysts said.
Gold climbed as high as 1,224.82 dollars an ounce _ a whisker away from therecord high of 1,226.56 dollars that was struck on December 3, 2009.
The glamorous metal later stood at 1,218.85 dollars in late afternoon dealson the London Bullion Market.
"While markets look vulnerable, the precious metal will maintain its safehaven role,'' said Capital Spreads analyst Simon Denham.
"The response of the central banks and the IMF to the southern European messis almost guaranteed to ensure continued volatility in world markets.''
Investors had on Monday welcomed the European Union and InternationalMonetary Fund aid package worth 750 billion euros (one trillion dollars) toresolve the debt and budget deficit crisis in Europe.
However, the euphoria faded on Tuesday amid resurgent doubts over countries'ability to reduce their deficits.
"Gold is holding ground ... and with doubts about the effectiveness of theEU/IMF already surfacing could be poised for a fresh challenge higher to targetlast year's all-time high,'' said analyst James Moore at TheBullionDesk.com.
IMF head Dominique Strauss-Kahn has hailed the trillion-dollar aid package asa big step forward.
However, higher gold prices indicated that traders remainsceptical over the deal, according to analysts.
"Investors are removing funds from risky assets into safer haven plays andthis is positive for both the US dollar and gold,'' said City Index analystJoshua Raymond.
"The EU rescue package has been widely interpreted as not a long termsolution to the deficit woes within the eurozone.
"With the near term outlook remaining unstable, investors have sought totransfer their cash into defensive assets.''
The glamorous metal, whose two main drivers are jewellery and investmentbuyers, hit record highs last year on the back of inflationary fears andincreasing moves by central banks to diversify assets away from the dollar.
Heightened concerns about the Greece have attracted fresh inflows of cashinto gold.
"This resilient performance ... is perhaps telling of the scepticism marketsstill have over the execution of the plans and the tough fiscal challenges thatwill face some euro area economies,'' added Barclays Capital analyst YingxiYu.
"While markets remain jittery over the effectiveness of the plans, gold islikely to perform relatively well.''