London, 18 July 2011

The gold price reached yet another milestone today, as a new high of US$1,599.00/oz was recorded on the London PM fix, while in intraday trading, the price breached a psychologically important $1,600/oz for the first time in history.

“The current worldwide macro-economic scenario of competing inflationary and deflationary forces combined with sovereign debt contagion in Europe and the federal debt ceiling impasse in the US continues to be a positive one for gold," according to Marcus Grubb, Managing Director, Investment at the World Gold Council.

“In Europe, sovereign debt contagion is once again being priced into bond markets with Italian and Spanish spreads over Bunds rising to multi-year highs.  In the United States, weak labour and housing markets, high energy costs and the prospect of weak growth are adding to market uncertainty.  The current congressional deadlock over the raising of the federal debt ceiling by August 2ndand the consequences for the country’s AAA credit rating of a missed payment of principal or interest is also weighing on markets.  Meanwhile, both Chinese and Indian inflation rates remain high as both central banks attempt to curb excess liquidity and rising food prices," said Grubb.

The uncertain macro situation also serves as a backdrop to the gold study published this week by the World Gold Council commissioned from Oxford Economics, entitled The Impact of Inflation & Deflation on the Case for Gold available at www.gold.org

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