Gold hits all-time high

Gold hits all-time high as investors seek haven
By Javier Blas and Jack Farchy in London

Published: May 11 2010 20:07 Last updated: May 11 2010 20:07

Gold prices hit an all-time high as demand surged to the highest level since the collapse of Lehman Brothers in 2008 amid volatile financial markets in Europe.

Spot gold in London surged to above $1,230 a troy ounce, surpassing the previous record set in December last year.

Traders and coin dealers said buying was exceptionally strong from German and Swiss investors. In Frankfurt, gold sellers said that demand late last week was three to four times normal levels. The spike appears to reflect concerns in Germany about the potential inflationary impact of the European Central Bank’s decision to buy up eurozone government bonds in the wake of the Greek debt crisis.

Michael Kramer, president of Manfra, Tordella & Brookes, a large New York-based coin dealership, said: “The demand has been huge overseas. Most of it is ending up in Germany.” Edel Tully, precious metals strategist at UBS in London, added: “Coin demand is so intense that SUPPLY is struggling to match”.

Kerry Tattersall, marketing director at the Austrian Mint, which sells the popular Vienna Philharmonic bullion coin, said the mint was producing “as fast as we can”.

Holdings in physically backed gold exchange traded funds are at record highs after some ETFs last week experienced their biggest inflows in over a year.

Global investors have been increasingly turning to gold since 2008. Gold traditionally performs well during times of financial distress or in times of US dollar weakness.

Global investors, led by the US, last year bought a record 228.5 tonnes of gold in the form of bullion coins, up from 77.4 tonnes in 2000, according to GFMS, the London-based precious metals consultancy.

Read More: http://www.ft.com/cms/s/0/c43cc5fc-5d2b-11df-8373-00144feab49a.html