TheStar
PETALING JAYA: Gold prices yesterday hit a historic high for the third day in a row on supply shortage worries and expectations of further interest rate cuts in the US.
According to Bloomberg data, spot gold price rose to a record US$929.84 per troy ounce early yesterday, before dipping to a low of US$921.60 at midday.
The metal was almost flat at US$928.50 at press time, versus its previous close of US$928.97.
Gold’s allure as a hedge against inflation and a safe-haven asset is unblemished, despite its price rising some 40% over the past six months. Some analysts are predicting that it would hit US$1,000 an ounce this year. With crude oil at US$90 per barrel and slower global economic growth forecast for this year, gold is winning over new admirers from international fund managers to wealthy investors in China and India.
While demand is rising, disruption in output from a major producer would push prices higher.
According to reports, South Africa’s worst electricity crisis in decades had crippled mining operations in the country since last Friday.
According to reports, South Africa’s worst electricity crisis in decades had crippled mining operations in the country since last Friday.
South Africa is the world’s second biggest producer of gold, behind China, with about 15% of the total global gold supply.
But the gold price upswing was capped yesterday, after South Africa's state-owned power utility company said it would increase supply to mining companies to 90% of their usual requirement by the end of the week.
Most mines were operating with 70% power supply yesterday, and they needed 90% to start gold production activities.
But investors were mostly chasing the precious metal higher on anticipation that the US Federal Reserve would further slash borrowing cost today at the end of its two-day scheduled meeting.
Last week, the US Federal Reserve made an unprecedented move to cut the benchmark rate by 75 basis points to 3.5% in an emergency meeting after weak US economic data and plummeting global stock markets fuelled fears that a US recession was imminent.
Gold price climbed above US$900 an ounce for the first time on Jan 24, after the surprise rate cut was announced.
Analysts said lower interest rates had weakened the US dollar and boosted the appeal of investing in gold. The metal is also regarded as a safe bet at times of crisis and uncertainties.
Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.
