The price of gold surged to fresh highs as concerns escalated that the Unites States could lose its AAA credit rating

The gold price touched a new record high overnight at $1,624 per ounce before backing off to trade at $1,617 Monday morning. Gold price were boosted by the lack of agreement over the weekend to raise the $14.3 trillion debt ceiling and the negative implications for financial markets. The price of gold surged to fresh highs as concerns escalated that the Unites States could lose its AAA credit rating. The U.S. dollar declined modestly versus the euro and pound while commodities were mixed. Crude oil fell 0.7% to $99.30 per barrel. Silver was the best performing component of the 19 member Reuters/Jefferies CRB index, rising 2% to $40.87 per ounce early Monday.

J.P. Morgan also reiterated its bullish outlook on the gold price. In a note to clients, the firm wrote that “Industrial metals as a group are broadly unchanged on the year but precious metals have continued to trade strongly. We remain extremely bullish of gold, looking for a move towards $1800, and above, by year end.”

“We see sovereign risk factors, EM inflation, a weak USD and broad economic uncertainty continuing to underpin gold, and silver by association,” J.P. Morgan continued. “Retail demand is a key driver and overshadows static visible investor length.”

Although euro zone officials approved the next round of bailout funds for Greece at last week’s European summit, the economic situation across the Atlantic remains quite fragile. Investors remain skeptical that policymakers will be able to prevent the crisis from spreading to other members of the PIIGS – including Italy and Spain – whose economies are much larger than that of Greece. Yields on Italian and Spanish governments bonds have risen substantially in recent weeks, signaling declining faith in the credit quality of each nation’s sovereign debt.

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