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Gold soars to high on South Korea purchase, economic jitters

August 2, 2011 | 11:47 am

Gold prices were at record highs Tuesday following word that the Bank of Korea had made its first gold purchase in more than a decade and as global economic concerns reinforced gold’s image as a safe haven from a turbulent stock market.

Near-term gold futures in New York jumped $22.90 to close at a record $1,641.90 an ounce.

Silver also gained, rising 78 cents to $40.08 an ounce, although the white metal has been stuck in a narrow range in recent weeks even as gold has continued to surge.

“The flight-to-quality money is flowing into gold,” Adam Klopfenstein, a senior strategist at MF Global Holdings, told Bloomberg News. “There’s a lot of uncertainty about the global economic recovery.”

From Reuters:

South Korea spent more than a billion dollars in its first gold purchase in more than a decade, as uncertainty about global growth and sovereign debt push central banks around the world to diversify foreign reserves.

A brittle global economic recovery and precarious debt conditions in the United States and Europe have boosted the safe-haven appeal of gold, lifting bullion to a record high on Friday.

The Bank of Korea said in a statement on Tuesday it bought 25 tonnes of gold over the past two months, raising its gold holding to 39.4 tonnes.

Reserve currencies, like the dollar and euro, "have been losing their clout since the recent global financial crisis partly due to abnormal monetary policy adopted in many countries and fiscal deficit problems," said an official at the central bank who declined to be named because he was not authorized to speak to the media.

Gold's price now is up 15.5% year to date. Silver is up 30%, but nearly all of that gain occurred amid frenzied buying in the first quarter. Silver peaked at $48.58 an ounce on April 29.


Americans cut spending for first time in 20 months

Stocks slump as concerns about economy grow

--Stuart Pfeifer

Photo: Gold bars on a table awaiting transport at a plant of gold refiner and bar manufacturer Argor-Heraeus SA in the southern Swiss town of Mendrisio November 13, 2008. Credit: Arnd Wiegmann/Reuters