NEW YORK (AP) ? Gold prices pushed to new heights Tuesday as investors digested the possible consequences of the lowered U.S. credit rating and Europe’s debt crisis.
Some investors view gold as a safer bet amid rising worries about debt levels of the major economies and tumbling stock markets. Its value, unlike that of a currency, doesn’t hinge on whether countries can make their bond payments, or on the vigor of their economies.
In midday trading, gold futures rose $19.50, or about 1 percent, to $1,732.70 per ounce after setting a record of $1,782.50 earlier in the day.
The declining appeal of the U.S. dollar as a safe haven and nervousness about flagging global growth have helped propel gold.
The metal’s price has more than doubled since the recession began in late 2007. Its climb accelerated this summer as U.S. lawmakers took a fight about raising the country’s ability to borrow money needed to pay debts to the last minute, and Europe’s debt crisis threatened to spread to two of its biggest economies, Spain and Italy.
Standard & Poor’s last week cut the U.S. credit rating to AA+ from the top-notch AAA because of worries that politicians are too sharply divided to enact significant spending cuts.
The Federal Reserve’s policymakers are meeting Tuesday. Investors, fearing the increasing likelihood of a recession, are expecting the Fed may announce new efforts to support the economy. Central bank efforts to boost the economy by pushing down interest rates are already reflected in gold’s price, said HSBC commodities analyst James Steel.
The central bank’s extraordinary efforts to drive interest rates lower in order to support lending tempered the dollar’s appeal as a safe haven. That’s helped make gold more attractive to investors.
While gold on Monday topped $1,700 an ounce for the first time, it remains below a 1980 peak when adjusted for inflation. In 1980, an ounce of gold sold for $850, or about $2,400 in today’s dollar.