Gold hits latest record high, nearly $1,830

Associated Press

NEW YORK

The price of gold hit its latest record high, nearly $1,830 an ounce, as investors spooked by the prospect of a return to recession sought out safety Thursday in the precious metal.

Gold prices have more than doubled since the recession began in late 2007. They’ve risen about 19 percent since the beginning of June, as European leaders struggled to keep the debt crisis from infecting the region’s major economies and U.S. politicians nearly drove the country to the brink of default, prompting Standard & Poor’s to cut the country’s AAA credit rating.

Morgan Stanley on Thursday cut its forecast for global economic growth for this year and 2012, saying the U.S. and the 17 countries that use the euro were “hovering dangerously close to a recession.”

While gold has hit a series of record highs over the past 21/2 months, the Standard & Poor’s 500 has dropped about 15 percent, while the dollar, a traditional safe haven during periods of market turbulence and fear, is flat against a group of six major currencies.

The metal’s value, unlike that of a currency, doesn’t depend on the health of a single country’s economy. Its swift rise has made it popular with investors seeking big returns, as well as presumed safety from turbulent financial markets.

On Thursday, for example, the S&P 500 fell more than 4 percent in afternoon trading, following a sell-off in European and Asian markets. A new slate of reports that pointed to a sharp slowdown in the economy spooked investors.

There was a steep drop in U.S. home sales last month, more people filed jobless claims last week and an August regional manufacturing report was weak. There was downbeat data from overseas.

Gold for December delivery, the most-traded futures contract, was worth $1,823 an ounce, up $29.20, or 1.6 percent. Earlier Thursday, it hit $1,829.70 per ounce, a record high.

The metal’s price could go higher. BofA Merrill Lynch commodities analyst Francisco Blanch on Thursday raised his price target for gold to $2,000 an ounce. Just a week ago, he’d set a $1,700 target. He cited the trend of central banks in emerging countries switching more of their currency reserves into gold.

“Physical gold is the ultimate collateral because it has no credit risk,” Blanch wrote in a note to clients.

Purchases of gold by the world’s central bankers more than quadrupled this April through June, compared with a year ago, said the World Gold Council.