Gold Price Higher for Third Consecutive Week

Los Angeles – The price of Gold rallied 2.32 percent to $1,387.10 an ounce to close higher for a third consecutive week as silver jumped 8.77 percent to close the week at a new 31 year high of $32.51 an ounce. The price of silver has gained 14.8 percent or $4.15 an ounce in February. The Gold/Silver ratio fell to a new 13 year low of 42.67 as silver outperformed gold for the week.

The week began with concerns of rising inflation among investors as well as the fear of political unrest spreading uncontrollably across North Africa and the Middle East. According to a recent report from the World Bank, global food prices are hitting levels that are so dangerous, they could further add to an already unstable political climate in several regions and could even push millions of people into poverty. Food prices jumped 29 percent in the past year with prices, presently, just 3 percent below an all-time high reached in 2008.

Investors fear a contagion throughout the region as thousands of anti-government protesters clashed with police and military forces in countries such as Yemen, Bahrain, Libya, and Iran. Saudi Arabia has even reportedly been detaining opposition party members. “The biggest question of course is if this (Mubarak’s stepping down) will lead to problems elsewhere. I think that’s what we need to focus on going forward, and that will keep gold steady,” said Bill O’Neill, of LOGIC Advisor. The World Gold Council (WGC), in its quarterly Demand Trends Report, says that global Gold demand grew nine percent during 2010 to over 3,800 metric tons, its highest level in 10 years. “This performance was mainly attributable to higher jewelry demand, strong momentum in key Asian markets and a paradigm shift in the official sector, where central banks became net purchasers,” said the report. After decades of being net sellers of gold bullion, the world’s central banks finally became net buyers of Gold in 2010 after buying 87 more tons of Gold than they sold.

The demand for physical Gold in China is soaring to record levels. The Industrial and Commercial Bank of China (ICBC) reportedly sold nearly 7 tons of physical Gold in January alone, almost half of what they sold in all of 2010. China’s first gold gift investment bar launched successfully last week. The only gold gift bar comes in 10, 20, 50, 100 and 1000 gram denominations and “fu” (joy) is engraved on the bar.

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