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 on a slowing global economy.
The declining appeal of the U.S. dollar as a safe place to park funds and nervousness about flagging global growth have helped propel gold.
Some investors view gold as a safer bet amid rising worries about debt levels of the major economies and uncertain 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.
Gold futures rose $29.80, or 1.7 percent, to $1,743 per ounce after setting a record price of $1,782.50 earlier in the day.
The metal’s price has more than doubled since the recession began in late 2007, and its climb accelerated this summer.
Gold is more than a currency substitute or an investment for scared traders desperate to latch on to an asset that isn’t losing value.
It’s also a material used in industrial products and by consumers.
With every fresh high the metal notches, the more consumers will have to pay for engagement rings, gold crowns for their teeth and perhaps even electronics.
Tiffany & Co., the high-end jewelry seller with the iconic blue boxes, has raised prices on some products twice this year, in January and again in June, said company spokesman Mark Aaron.
“Our strategy is simply to pass through higher costs to the customer,” Aaron said. “Diamond costs have increased a lot. So have platinum, silver and gold.”
Sellers of cheaper jewelry have also been affected.
Blue Nile Inc., a website that sells engagement rings and other jewelry, said last week that the big leap in the price of gold and diamonds had hurt its revenue growth this spring. It raised prices to make up for the big jump in materials costs.
The company also said it was trying to offer shoppers cheaper alternatives to gold and diamonds, such as colored gemstones, sterling silver and pearls.
Zale Corp., which has more than 1,900 shops in the U.S. and Canada, started raising some prices in April because of skyrocketing costs for diamonds, gold and silver. It increased prices again in July across North America, and began offering less expensive alternatives, such as stainless steel, in its “Piercing Pagoda” kiosks, said spokesperson Roxane Barry.
Despite higher prices ? up about 26 percent in the second quarter, according to the World Gold Council, an industry group ? demand for gold jewelry is holding steady.
Eager shoppers in India and China, the world’s biggest gold-jewelry buyers, remain buyers, the group said in a report.
U.S. shoppers are turning away from gold jewelry as prices rise and unemployment remains high. Demand at home fell 10 percent in the first three months of the year, according to the World Gold Council. And prices have risen by about $300 an ounce since the end of March.
Consumers aren’t just choosing cheaper alternatives for their jewelry. They’re also trying to save money on medical bills, opting for other metals or ceramics to repair teeth. Gold used in crowns and other dental services dropped 10 percent because of the higher price in the first three months of the year, the World Gold Council said.
Gold used by the technology industry was unchanged in the first three months of the year. The group said that there was anecdotal evidence that some manufacturers were cutting back on gold coating on electronics products to save money, even though that led to some component failures.
Gold may keep climbing. The Federal Reserve said Tuesday that it would keep interest rates at a record low for at least two years. The lower rates could further erode the dollar’s value as a safe haven and enhance gold’s appeal.
Still, 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.
While gold on Monday topped $1,700 an ounce for the first time, it remains below a 1980 peak, when adjusted for inflation. At that time an ounce of gold sold for $850 or about $2,400 in today’s dollars.