Gold (NYSE:GLD) continued to rise Wednesday, benefiting from the U.S. Federal Reserve’s decision to keep interest rates low through 2013, as well as another day of slumping equities.
Hot Feature: Here’s Why Gold is the Commodity Above All Others.
Gold for December delivery rose to 2.7% to $1.789.10 an ounce on the Comex division of the New York Mercantile Exchange. December gold actually reached as much as $1,801 an ounce during the day, beating Tuesday’s highest mark for to take the all-time record. Gold settled Tuesday at $1,743 an ounce.
While today’s market sell-off has encouraged investors to buy gold (NYSE:GLD), which is traditionally safer than equities, the Fed’s decision to keep interest rates low has also made gold more attractive, as it doesn’t pay dividends or interest and costs money to store. When interest rates rise, investors tend to sell the commodity rather miss out on higher-yielding assets.
Weak global economic growth and currency debasement, especially that of the U.S. dollar and the euro, have also encouraged gold (NYSE:GLD) investments. Inflation is also a risk in the U.S. if the Fed continues to loosen its monetary policy. Only higher currency yields and monetary tightening post a threat to rising gold prices. Of course, an economic upswing could also do the trick.
Holdings in the SPDR Gold Trust (NYSE:GLD) have climbed 2.53% today.
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