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Gold surges past $1,670 toward new record amid economic worries

August 3, 2011 | 11:01 am

gold prices
Gold prices are surging along with concerns about the state of the global economy, rushing to a high of $1,675.90 an ounce in New York on Wednesday, up from $1,641.90 on Tuesday.

Investors, spooked by a raft of discouraging reports about slowing job growth, have been pulling out of stocks and retreating into the safety of the precious metal.

Even as the government cobbled together a deal on the debt ceiling, Wall Street was stumbling. The turbulence has helped gold continue its decade-long upward march.

The country's credit rating could still take a hit down the line, threatening the value of the dollar, said Marin Aleksov, chief executive of precious metals broker Rosland Capital in Santa Monica. But the potential for more borrowing does the same, he said.

"The economy's stalling, you have the possibility of a downgrade and a debt deal that's just not enough in the long term," he said. "If you don't trust currency, you don't trust the markets and you don't trust your leaders, where else can you go but gold?"

Prices hit a then-record high of $1,641.90 an ounce Tuesday amid news that the Bank of Korea bought its first batch of gold in more than a dozen years. Analysts said they expect more central banks looking to limit their exposure to a weakening dollar to follow suit.

By the end of the year, the price could meet -– or exceed -- $1,800, they said.

RELATED:

Gold soars to high on South Korea purchase, economic jitters

Silver rallies closer to $50, gold gains as buyers keep coming

-- Tiffany Hsu

Photo: Gold souvenirs are displayed at jewelery shop in Amman. Credit: Majed Jaber / Reuters

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