Gold prices surge to new record as gold prices surge again

Gold prices have surged again, to their highest level in three months as investors sought safety in gold as the US Federal Reserve raised interest rates for the first time in five years.

Gold futures in Australia’s major cities were up about 2.5 per cent on Monday, as investors continued to flock to the precious metal amid concerns about the economy.

Ahead of the rally, gold was trading at $1,966 an ounce in New York.

But on Monday it hit a new record of $1.1270 an ounce, up almost 8 per cent from the previous day, according to data compiled by Bloomberg.

The metal’s gains on Monday followed a 10-year low in mid-December and the first five-day gain since June 2014, when gold surged to record highs of $2,856 an ounce.

It also helped lift the benchmark S&P 500 index to a new five-year high of 2,037.60.

Australia’s biggest bank, Commonwealth Bank, said it was looking for a rate hike to $4.60 an ounce from $3.50.

“The current economic and financial environment is making it more difficult for Australians to access and access affordable financial services, and the increased volatility in the economy and inflationary pressures may impact our ability to support our customers,” Commonwealth Bank said in a statement.

Australian shares fell sharply after the data, with the Australian dollar down almost 4.5¢ to 76.60 cents US, or 1.4 per cent.

Meanwhile, gold prices rose to $1 a kilogram on Monday from $1 in mid December.

As the Federal Reserve raises rates, gold is a major commodity with a value of about $2 trillion.

At the peak of the market, gold hit a record of about 5,400 tonnes.

This was enough to lift gold to a record high of $4,300 an ounce at its peak in late 2014.

More to come.