Gold rallies to new highs amid flight to safety


Gold prices shot up US$12 per ounce this afternoon after today’s US GDP data came well below expectations, resulting in a flight to safety among investors.

The latest estimate for US GDP growth for the first quarter was revised from 1.9 percent to 0.4 percent, a report from the Commerce Department revealed this afternoon.

In addition to that, the data showed that economic growth in the US reached 1.3 percent in the second quarter, well below forecasts of nearly 2 percent growth.

Other factors stimulating demand for gold were another delay in a vote on a key US debt plan and Moody’s warning that Spain may soon see its Aa2 sovereign rating slashed.

Efforts to raise the US debt ceiling before the 2 August deadline suffered yet another blow on Thursday after the US House of Representatives postponed a vote on Speaker John Boehner’s debt reduction plan for the second time this week.

Boehner’s proposal failed to secure enough support within his own party with Republican conservatives calling for steeper cuts to budget expenses than envisaged by the plan.

While the prospect of a US debt default is still seen as unlikely, traders seem to be reluctant to buy riskier assets, while demand for safe haven assets such as gold remains strong.

hit a new record at US$1,632/oz this afternoon before pulling back to US$1,628/oz. Silver moved in the same direction as gold, surging 48 cents to US$40.21/oz, while platinum dropped US$2 to US$1,781/oz.

Today’s top risers in the sector were:

Red Rock Resources (LON:RRR), up 19.5 percent at 7.2 pence at midday

Norseman Gold (LON:NGL), up 8.5 percent at 18.42 pence

Eurasia Mining (LON:EUA)
, up 5 percent at 0.995 pence

Anglo Asian Mining (LON:AAZ), up 4.5 percent at 47.5 pence

Caledonia Mining (LON:CMCL), up 4.5 percent at 6.39 pence

The top fallers were:

Orsu Minerals (LON:OSU), down 10 percent at 2.25 pence at midday

Oxus Gold (LON:OXS), down 6 percent at 0.8 pence

ECR Minerals (LON:ECR)
, down 5.5 percent at 1.7 pence

Bezant Resources (LON:BZT), down 5 percent at 34.34 pence

Alba Mineral Resources (LON:ALBA), down 5 percent at 0.9 pence

Quick facts: GOLD

Price: - -

Market: AIM
Market Cap: -

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