Gold shines at 25-year high

The price of gold broke through the $600 an ounce barrier for the first time in a quarter of a century today.

Gold hit $601.90 an ounce – its highest level since January 1981 - before falling back below 600 US dollars as investors continued to buy into commodities.

The price of gold rose 23% last year and has risen a further 13% so far this year, while other metals such as copper and zinc have also soared in value.

Gold expert Clem Chambers, chief executive of market analysts ADVFN, said the price of gold could reach $1,000 an ounce.

“It is not a case of why, but of why not,” he said. “Gold has been too cheap for too long. While few will predict 1,000 US dollars an ounce, few would bet against it.”

The price of gold has been boosted by the general clamour for commodities which saw oil reach record levels last year and the price of copper soar 44%.

Political tensions in Iran and the threat of bird flu have also added to demand for gold.

“Gold is a hedge against danger,” said Mr Chambers.

It is also a favourite investment of emerging countries such as India, where rapid economic growth has led to increased demand for gold.

Mr Chambers said: “Gold breaking through the 600 US dollar barrier is another milestone in gold becoming the next big booming commodity.

“Commodity prices have been rocketing so it would seem perverse if gold didn’t too.

“With insufficient supply to meet consumption, with uncertain political developments in the Middle East, with inflation worries slowly but surely increasing and with emerging markets, who are historically strong buyers of gold, also booming, it is hardly surprising that gold is rising.”