Gold price goes for $1,300
Gold on Tuesday made a dash for the crucial $1,300 an ounce level as investors seek a safe haven from turmoil on financial markets rocked by the confidence-shaking move by the Swiss central bank last week.
In heavy trade of more than 20m ounces by noon in New York, gold for delivery in February – the most active futures contract – jumped just over $20 an ounce from Monday's close hitting a high of $1,297.20 an ounce – the highest since August 19.
It's the eighth positive trading session in a row and the metal is now trading up over $110 or 8.7% in 2015.
Gold's gains this year also comes into the teeth of a rampant US dollar. On Tuesday, the greenback hit fresh 12-year highs against the currencies of major US trading partners, with the dollar index topping 93. Since August 18, the last time gold traded above $1,300 an ounce, the USD has strengthened by 12%.
Commodities priced in US dollar usually have an inverse relationship to the world's reserve currency, particularly gold. The US dollar index record high of 164.72 reached in February 1985 coincided with the bottom in the price of gold of $284.25 an ounce during that same month.
Switzerland's bombshell currency and interest rates move on Thursday really lit a fuse under the price of gold and the European central bank's likely announcement of a quantitative easing program on Thursday this week and a possible breakaway from the euro by member Greece in polls over the weekend will only add fuel to the fire.
A loss of confidence in central banks, even as the US Federal Reserve tries to exit its unconventional monetary policies, has been behind gold recent strength, but the precious metal's advance this year has been steady as financial markets cope with the fallout from the collapse in the price of oil, the impact of the strong dollar on emerging market debt repayments and an equity market correction in the US.
Silver, which underperformed gold last year, also raced ahead on Tuesday with March contracts rising 1.6% or $0.30 to a day high of $18.05, the highest since mid-September. Silver is up 13.6% in 2015 after losing 20% of its value last year.