FXstreet.com (Barcelona) - The gold bullion continues to record fresh historic highs above the $1400 zone as renewed euro-zone sovereign debt concerns buoy the safe-haven appeal of the yellow metal. By mid-day over Europe, the most active gold contract for December delivery trades just under its recent peak of $1422.10 a troy ounce.
The sudden rise in Irish and Portuguese interest rate spreads has the market doubting the sustainability of recent austerity measures in periphery European nations, which are plagued by high deficits. The rekindling of these debt jitters is allowing for a slight recovery in the US dollar following last week´s QE2 announcement, as well as the strengthening of precious metals as investors search for safer alternatives.
What´s more, Robert Zoellick, president of the World Bank, further put gold in the spotlight by suggesting G20 economies employ a modified gold standard using the metal ¨as a reference point of market expectations about inflation, deflation and future currency values.¨ While the proposal in interesting, it is not likely the US will go for a system where the greenback is not the world´s principle reserve currency.
