Gold prices surged above $900 a troy ounce for the first time as investors on Monday sought refuge from a weakening US dollar and further losses on Wall Street.
As the spot price hit $914 an ounce in London, traders were betting it would reach $1,000 within three months. The surge to a record high was also prompted by fears that lower interest rates and higher food and energy commodities would trigger an inflation rise.
Speculators on the New York gold market hold 10 bets on higher prices for each one on lower prices, according to analysts. Investors in Tokyo and on the Shanghai gold futures market are also betting on higher prices.
Gold’s strength boosted platinum to a high of $1,590 an ounce and silver to a 27-year high of $16.58 an ounce.
The US dollar fell to $1.4890 against the euro, its weakest level in seven weeks.
Meanwhile, agriculture commodities jumped as the weaker dollar attracted overseas buyers and after signs that European Union efforts to boost agriculture production had failed so far in spite of the suspension of the limits to grain crops.
The EU last year scrapped a rule requiring farmers to set aside 10 per cent of their land in an effort to increase output. However, French and German farmers, which account for half of the EU-15 production, sowed less than 2 per cent more winter crops.
The European failure follows a similar pattern in the US. Soyabean and rice prices surged to an all-time high, corn jumped to a 12-year record, and wheat prices surged, with the new crop futures hitting all-time highs. In Paris, rapeseed futures traded above €450-a-tonne for the first time.
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