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Gold breaks record highs on woeful outlook for global economy


By Ben Kilbey in London


August 24, 2011 - It was yet another day of record highs for gold on August 22, with reasonable strength seen August 23, as investors piled into the precious metal, with the outlook for the global economy continuing to look shaky at best.


Following a run of poor data from both the US and Europe, coupled with the ongoing eurozone fiscal crisis and the US' debt ceiling wrangle, gold has been the true winner, up roughly 15% already in August. Now many are talking of breaking through $2,000/oz.


Chart: Gold fixes down at $1,876/oz, but well bid: June 24 - August 23, 2011

Source: Platts


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Gold hit an all-time high of $1,917.50/oz August 22 at 2215 GMT, although there has been some selling pressure since which UK investment bank Fairfax ascribed to better-than-expected Purchasing Manager's Index data out of Germany. Gold fixed at $1,876/oz on August 23 afternoon.


German manufacturing index was better than expected showing a reading of 52 in Aug against expectations of 50.9.


However, eurozone manufacturing activity stagnated in August, with the PMI for the month at 51.1 points, unchanged from July's 23-month low, London-based financial information services company Markit said August 23. An index figure above 50 indicates eurozone manufacturing is growing.


"The eurozone economy grew only marginally again in August, suggesting that recent months have seen the weakest expansion for two years," said Markit chief economist Chris Williamson said in a note.


Gold fixed August 23 morning at $1,886.50/oz.


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