NEW YORK — The price of gold streaked past $1,700 an ounce for the first time Monday. Anxious investors sought safety in the metal as stocks tumbled around the world after the U.S. lost its AAA credit rating.
Gold’s allure stems in part from fears that the world’s major economies are dangerously indebted. Its value, unlike that of a currency, doesn’t hinge on whether countries can make their bond payments.
Gold soared $61.40, or 3.7 percent, to settle at $1,713.20 on Monday. It reached a record high of $1,718.20 per ounce in morning trading. Still, adjusted for inflation, an ounce of gold remains below its 1980 peak of $850, which translates into about $2,400 in today’s dollars.
Investors have turned to gold as the appeal of the dollar — the world’s biggest reserve currency and traditionally a safe bet for investors — has ebbed. The dollar has lost some of its allure because of concerns about the country’s ability to pare its debt, the flagging U.S. economic recovery and measures the Federal Reserve has taken to support the economy.
Gold’s price has nearly doubled in price since the start of 2009, and its climb accelerated this summer.
The metal has become another currency, said George Gero, vice president at RBC Global Futures. The euro and dollar are weighed down by debt concerns. There was concern about the yen and Swiss franc, which investors also regard as safe havens, after moves by the central banks of Switzerland and Japan last week to curb the gains in their currencies.
“Investors have been concentrating on acquiring an asset that preserves purchasing power,” Gero said. Last week’s panicked stock selling also boosted gold’s appeal.