Further gains see gold close week up 7.3%

GOLD prices rose by 2% yesterday to reach a record high of $1,877 per ounce as equity-wary investors continued to switch theirattention to the commodity markets.

Increased talk of a slowdown in the world’s economy hit international stock markets again, with poor early trading levels pulling European stocks down to their lowest level for two years.

Yesterday’s rise in gold meant that its price has now reached record levels on nine separate occasions this month alone. In the last week alone, gold prices have risen by 7.3% — the commodity’s best value showing since the end of 2008.

Early trading on the markets showed heavy losses for many leading exchanges. But after a brief afternoon rally, which saw it push its head above water, London’s FTSE closed 1% down at just over 5,000 points.

This was still better than the 4.5% fall the FTSE suffered in Thursday’s trading session; its worst single-day fall for two-and-a-half years. The DAX in Frankfurt and the CAC-40 in Paris fell by 2.2% and 1.9% yesterday. They had seen respective falls of nearly 6% and 5.5% on the previous day.

Ongoing questions about the eurozone’s debt crisis surrounded investors’ unwillingness to commit yesterday and selloffs were most evident in the banking stocks, with the exposure of many European institutions to eurozone government debt — and a potential difficulty for them borrowing fresh funds on the international money markets — a major factor.

In London, for instance, Lloyds Banking Group fell by nearly 5% and Royal Bank of Scotland shed 5.4%.

German Chancellor Angela Merkel also reiterated her opposition to jointly issued eurozone bonds, saying that “a collectivisation” of the region’s debt would leave member states worse off.

Dublin’s ISEQ index — which tumbled by 4.5% on Thursday — fell by a further 1.42%, or 35 points, to close the week at 2,420 points. All in all, around €1.4bn was wiped off the combined value of Irish shares this past week.

Tullow Oil — which reports interim results next week — fell by over 8%, or by 94c, to €10.45 on the back of speculation that it might cut its production guidance for this year after suffering drilling delays at some of its African projects, including its headline Jubilee field off the Ghana coast.

The likes of support services group DCC; bakery group Aryzta; building materials giant CRH; food giant Kerry; food/agri-services company Origin Enterprises; explorer Providence Resources (which gave away the 20c gain it made on Thursday); shipping group ICG and media/broadcasting business UTV Media were the notable fallers in Dublin, while Paddy Power was the only notable climber.

Initial trading on the US markets remained volatile, but the early evident falls (0.1% on the Dow Jones and 0.5% on the Nasdaq) were in marked contrast to their fortunes earlier in the week. The main Asian markets of Tokyo and Hong Kong were both down by around 3% yesterday.