Record gold prices reflect the volatility in global sharemarkets during the past three days as investors react to the almost $US1 trillion ($NZ1.39 trillion) bail-out package for Europe.
Gold hit $US1234 ($NZ1719) on the Comex division of the New York stock exchange yesterday as jittery investors fled the volatility of the equity markets and headed for the "safe haven" status gold has offered for centuries, as a hedge against inflation. The price later eased by $US4.40.
Much of the losses of last week's Dow Jones Industrial Average index' almost 1000 point plunge has been clawed back, but investors' initial welcoming of the $US1 trillion bail-out turned to concern it would not be enough, again rattling market sentiment.
Many markets returned to slight negative trading yesterday, albeit following some huge gains in the days before.
Craigs Investment Partners broker Peter McIntyre said gold had become attractive again as investors and fund managers feared the $1 trillion package, backed by 17 European Union countries, would be a catalyst for inflation.
"What's of concern is this bail-out dwarfs the Tarp [Troubled Asset Relief Package of $US356 billion] given to US banks," by Washington in 2008, he said.
He noted US bankers at present have a separate debt exposure to European countries worth $US2.5 trillion.
Late afternoon trading yesterday in Australia was in positive territory, with the All Ords index and S&P 200 up around 0.8%, while in New Zealand trading on the NZ50 was down 10.94 points, or 0.34%, at 3156.08.
Mr McIntyre said the US-Dow Jones Industrial Average closed down 0.34%, the Nasdaq Composite up 0.03% and the Standard and Poor's 500 down 0.34%. In the United Kingdom the FTSE 100 index was down 1% and France's Cac 40 down 0.73%, the latter after a previous day's gain of 9%.
Early futures trading in the US and European bourses were mostly starting the day in negative territory, Mr McIntyre said.
Asia's main bourses were trading down yesterday, with the South Korean Kospi down 0.09%, China's Shanghai Composite at 0.94%, Hong Kong's Hang Seng 0.44%, Singapore Straits Times index down 0.21%; the exception being Japan's Nikkei, trading up 0.25%.
US crude oil futures fell on Tuesday in a seesaw session, between an early $US75.36 low and a high of $US77.68, to end down at $US76.37, with Dubai at $US76.25 a barrel.
Traders remained cautious about the $1 trillion rescue package, which aimed at stabilising the euro and keeping Greece's debt problems from spreading, Reuters reported.
Expectations that US oil inventories rose last week also put pressure on prices, as did high stockpiles in Oklahoma, which is the delivery point for US benchmark crude, New York commodity analyst Tom Bentz said.
"Certainly, worries about Greece and Europe have not gone away. Also, [there is] concern about China inflation and the potential for further tightening," he said.
Last Thursday, the blue-chip Dow Jones index briefly dropped almost 1000 points as global markets were unsettled by fears that Greece's debt crisis would spread to other euro-zone countries and derail the global economic recovery.
In response this week, the US Securities and Exchange Commission (SEC) and leaders of key market exchanges have agreed to strengthen circuit breakers after last week's unprecedented stock plunge. The SEC is investigating the causes behind the plunge that briefly wiped out billions of dollars in share values.
European shares fell on Tuesday, after a massive rally on Monday on the $US1 trillion package to prevent the spread of the European debt crisis, as doubts about Greece's ability to smoothly cut its fiscal deficit persisted.
