International gold prices rose 2% to a record $ 1,274.75 an ounce, the highest in the history of the name. Western market analysts generally believe that gold prices will continue at least in the short term bullish. The world’s leading metal consultancy GFMS has just released “Gold Survey 2010, the latest report” is also estimated that investors in the second half of the demand for gold will rise, the company president Philip carat Puwei Ke predicted end of the year may exceed 1,300 per ounce dollar mark.

In the past 10 years, gold prices continue to rise, has tripled since many, especially the 2008 international financial crisis, gold prices soared, only to rise this year, about 15%.

Why the recent surge in the price of gold?

First of all, the Western economic recovery falter and serious unemployment, weak consumer, sovereign debt crisis has not been completely eliminated. Many economists worried that even a “double dip.” Meanwhile, EU countries, all in the substantial cuts in government expenditure, which, though beneficial to the long-term development, but it will undoubtedly hurt the current economic recovery. In this context, a sign of trouble, stocks and other securities market turmoil will be severe, gold naturally became the most secure “safe haven.”

Secondly, the continuous depreciation of the dollar, especially against the yen and Swiss franc parity has decreased to a record low. To stimulate economic growth, the United States a lot of money-burning, the rapid expansion of budget deficits, national debt has been accumulated up to 15 trillion U.S. dollars, therefore, the weak dollar is the trend. In accordance with the law, the more depreciation of the dollar, gold more popular.

Third, consumer demand. Gold is also a consumer of gold jewelry market, especially in recent years, the Asian market is very hot. In addition to outside customers buy gold jewelry, gold bars and a variety of gold coins is popular. In the UAE, people can vending machines to buy gold bars. According to reports, last year’s gold jewelry consumption amounted to 1760 tons, and 2,500 tons of global gold output, however, coupled with surge in investment demand, the gold market is in short supply tensions.

Fourth, investors stir. In the economic downturn as an important financial investment instruments, favorable for gold by speculators. Particularly the financial crisis has sown the seeds of inflation, national relief measures and loose monetary policy led to rising inflation in many countries. Ascribed to the inflation of the risk of a large number of speculators buying gold last year, to over 1900 tons of gold investment demand.

In addition, gold prices also with the world’s central banks to buy gold on the net, that is to buy than sell. It is estimated that this year they bought a net 15 tons of gold, though small in number, but this is the first time in 20 years, the phenomenon. There are reports that in the past 10 years, the world’s central banks sold a net annual average of 442 tons of gold, equivalent to the total global gold demand 10%. The financial crisis, the EU national central banks no longer as in the past sold a lot of gold, but profitable to invest in sovereign debt. At the same time, some other countries, central banks, which buy large amounts of gold as a reserve to protect the national reserve safety. This shift shows that the central bank from the seller into the buyer, thus aggravating the contradiction between supply and demand in the gold market.

With gold prices soaring, some of the world’s largest banks and security companies in the treasury is almost full, a shortage of storage space, so they are or plan to expand the new vault. Gold coins and gold bars in storage fees are usually charged at a percentage of the price of gold, so the banks and security companies in the storage business is very profitable in recent years.

The combination of factors cause the price to skyrocket. Although gold prices this year may exceed $ 1,300 an ounce mark, but adjusted for inflation, still below the 1980 record of 850 dollars per ounce (equivalent to $ 2,300 at current prices) the actual historical record. However, from the current point of view, it does reflect the soaring price of gold on the current world economic situation and its prospects for recovery concerns.

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