El Salvador president proposes bill to overturn metals mining ban
In 2017, El Salvador became the first country in the world to ban forms of metals mining.
Gold futures pulled back early on Friday after adding over $50 an ounce since Monday and more than a $100 since the start of July, but in after hours trade in New York had reached $1,594.50, adding a solid $5 to Thursday’s record high of $1,589.30 an ounce.
Thursday’s gains were sparked by rating agency Moody’s saying US bonds were on review for possible downgrade which followed similar warnings by S&P. Although Fed chief Ben Bernanke has downplayed talk of fresh stimulus for the US economy ongoing political wrangling about the US’s $14.3 trillion debt ceiling are sending investors into safe havens like gold.
MarketWatch pointed out that prices, however, remain well below the previous record high for gold in real terms of around $2,400 on Jan. 18, 1980, according to a research note from Capital Economics.
Emergency meetings in Europe earlier in the week where finance ministers considered allowing Greece to default on some of its debt, the spread of the euro crisis to Italy and news on Tuesday that US Federal Reserve minutes indicate the possibility of additional financial stimulus lit a fuse under gold.
Gold is considered a hedge against inflation and further quantitative easing could flood financial markets with cheap money as it did in the previous round – QE2 – when US monetary authorities injected some $600bn to drive down interest rates.
