Wednesday, July 27, 2011

Gold hits new high of $1624

Gold hit a new high of $1,624 an ounce on Wednesday as investors worried the U.S. would default on its debts piled money into the perceived safe haven of bullion.

U.S. lawmakers are embroiled in a crisis over the U.S. debt ceiling. Unless a compromise can be reached, the world's largest economy is on track to default on its obligations by Aug. 2.

In times of uncertainty, investors tend to flock to gold. The precious metal has gained almost 15 per cent this year adding to even stronger gains in 2010.

The loonie slipped back below the $1.06 US level to 105.97 cents US in early morning trading. Canada's currency has likewise benefited from U.S. dollar weakness in the past week, gaining almost a cent over the period.

While the loonie moved slightly lower against its U.S. counterpart, the greenback was still lower against a slew of other major currencies on Tuesday, including the Japanese yen and the Swiss franc.

"Investors [want] the safety of fiscally responsible, resource-based economies," Scotia Capital's Camilla Sutton said in a note Wednesday.

Oil prices fell below $99 US a barrel after a report showed U.S. crude supplies unexpectedly jumped by four million barrels last week, suggesting demand may be weakening. Analysts had expected a drop of 2.3 million barrels.

Copper prices also weakened, giving back a chunk of Tuesday's seven cent gain. The September contract in New York gave back four cents to $4.44 US a pound. (more)