Gold is the strongest currency in the world today and has risen to $1,220/oz and over €1,000/oz with a variety of macroeconomic and geopolitical headwinds supporting the yellow metal. These include geopolitical risks in the Koreas and in the Middle East,  the macroeconomic risks posed by the continuing sovereign debt crisis, concerns about the euro and growing concerns about a double dip recession. 

Risk aversion has increased with equity markets internationally under pressure due to the poor Chinese manufacturing data and continuing sovereign debt concerns in the eurozone. Gold is currently trading at $1,222/oz and in Euro, GBP, CHF, and JPY terms, at €1,007/oz, £845/oz, CHF 1,428.58/oz, JPY 110,933/oz respectively.

The growing environmental catastrophe in the Gulf of Mexico may also have ramifications for markets. The financial cost of tackling the oil spill in the Gulf of Mexico, the worst in US history, now stands at nearly $1 billion as BP prepares for its latest attempt to stem the flow of oil. Scientists are concerned that the massive oil spill could kill much of the invertebrate and fish in the sea and this could ripple across the food chain leading to even higher food prices and inflation. US wholesale food prices are up 6.8% in the past year. Food prices for the month rose by 2.4%, the sixth consecutive monthly increase and the largest jump in over 26 years. This jump in inflation has come at a time of dollar strength and should the dollar experience another period of weakness (which seems likely) then inflation could rise significantly.



Gold has risen again due to continuing economic uncertainty in the eurozone. This is not being helped by the increased degree of political uncertainty as seen in Germany where President Kohler has resigned due to remarks he made supporting the war in Afghanistan.

A close above $1,230/oz could see us quickly surge to surpass the recent record (nominal) high of $1,248/oz. Gold's support is at $1165/oz and $1185/oz.