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Gold prices rush to record close

Futures prices for the investors' safe haven top $880 an ounce.

ADVERTISEMENT [AP photo] An ounce of gold sold in January 2007 for $675 shown. Gold futures surged to an all-time high above $880 an ounce Tuesday.

NEW YORK - It's the stuff of Western dramas where rugged men went looking for it in the mountains. It's the glittering metal used in fancy jewelry, the highest honors for sports and the bars tucked away in heavily secured safes. And these days, gold's appeal as a safe-haven investment has carried it to record prices.

Gold futures surged above $880 Tuesday to their highest level ever, not accounting for inflation, propelled higher by rising oil prices and a weak U.S. dollar.

An ounce of gold for February delivery climbed as high as $884 on the New York Mercantile Exchange, topping by almost $10 its previous record of $875 set in 1980, and later settled at $880.30, up $18.30. The closing price for January delivery, as reported on this page, was $878.00, up $18.40.

Market analysts who have watched gold's ascent weren't surprised that gold had reached a new high. Still, when adjusted for inflation, gold remains far short of the jaw-dropping levels of 28 years ago. An ounce of gold at $875 in 1980 would be worth $2,115 to $2,200 today.

Gold that cost $650 an ounce in January 2007 has soared during the past year on rising prices for oil and other commodities and also by the falling U.S. dollar. Those trends have increased the metal's appeal as a hedge against inflation; gold is also seen as a safe investment in times of political and economic uncertainty around the world.

Hedge and pension funds, along with other long-term investors, also flocked to gold as the mortgage and credit crisis in the U.S. intensified.

Few signs have appeared of the frenzy that surrounded the metal's last record-setting foray, but jewelry prices do reflect the sharp run-up in precious metals prices over the past few months. As Valentine's Day approaches, shoppers might not be so sweet on rising price tags, and choose to settle for a smaller or lighter pair of gold earrings.

Midtown Manhattan jeweler Ken Coban of Two Tone Jewelry Mfg. Co., who's been in the business 36 years, said there's no run on selling gold jewelry, but "a lot of people are selling their old stuff to buy new stuff."

[Last modified January 9, 2008, 00:00:39]