Gold prices reach a 25 year high

News Summary

Spot gold prices reached a peak of $556.50 USD an ounce today. Speculative buyers have been pushing up the prices in the US in the last day of trading before the long weekend - Martin Luther King Day is on Monday.

Among the investors buying into the current gold rush are exchange-traded gold funds (ETFs), which have been generating a high level of investor interest since 2005. ETFs are traded on major stock exchanges and give investors a share of gold investments. ETFs are estimated to hold gold reserves equivalent to that of Russia. (That's almost 400 tons of gold!)

The bull run is not restricted to gold. In fact, all the major metal commodities have been on the rise. Platinum reached a 26 year high today of $1,044.40 USD per ounce, just a few dollars short of an all-time high. Other gainers include palladium, silver, lead, aluminum and zinc. Demand has been outstripping supply for years, and the rising cost of energy has only pushed production costs and prices higher.

The recent speculations over interest rates and the strength of the US economy has also weakened the dollar and pushed commodity prices to record highs.

"Gold is more and more becoming an insurance policy against any type of disruptive risk and most portfolio managers believe that gold is an asset which should not be missed in their portfolios," Frederic Panizzutti, senior vice-president at MKS, said in the firm's outlook report for 2006.

Sources:
CNN Money
Reuters
Fin24.co.za