Gold hits record near $1,250

14th May 2010 12:40

The price of an ounce of gold hit a record high just short of $1,250 on Friday as continuing worries over the European debt situation and the effect it may have on the global economy stoked demand for the yellow metal.With investors concerned about subdued economic growth and company earnings, the defensive qualities of gold gained renewed appeal.Gold rose by 1.4% to $1,249.70 an ounce on Friday before retreating and hit €1,000 an ounce for the very first time. The jump in demand for gold came as traders shunned equities amid fears that the measures that need to be taken to improve the fiscal position of European governments will augur a period of weak economic growth. Concerns are centred on southern European countries using the euro such as Greece and Portugal. The UK has also been attracting attention as the new government looks to start addressing the deficit that has accumulated since the start of the economic crisis. The massive fiscal stimulus programme that helped spark a strong economic recovery last year has left the UK with large debts.The rise in the gold price also came as sterling and the euro weakened against the dollar. While most stocks in the FTSE 100 fell, Fresnillo, the Mexican silver and gold producer was among a handful of risers as it benefited from strong gold prices.