Belfast Telegraph

US gloom sends gold price to a record high

By Clare Weir

The price of gold has hit a record high amid concerns over US debt and the health of the world's largest economy, prompting alarm for Northern Ireland jewellers.

The surge in the value of the precious metal came after ratings agency Moody's placed the US debt rating on review and said there was a "possibility" it would default.

Gold is seen as a safe haven for investors and the price surges during times of economic uncertainty and hit an all-time high of $1,594 (£988) an ounce before easing back to $1,591.

US politicians must agree to raise the country's debt limit to avoid default by August 2 and members of the opposing Democrat and Republican parties are in dispute over how this will be achieved.

Brona Spence, a company director with Steenson's jewellers, which has outlets in Belfast and Glenarm, said that the price rise is not good news for the industry.

"Our view is that these high prices are not good for business," she said.

"All costs are escalating and in today's economic climate we cannot put the prices up any more, so our profit margins are being squeezed. It is doing our business harm. We have seen a massive difference in a short space of time, I would say in the last year gold would have gone up around a third. Silver and platinum are also growing in value.

"Overall we have seen a decrease in footfall. People who are getting married and choosing wedding rings are still spending and still not compromising on quality but it's the little things that we are seeing a drop-off in, things like earrings and other gifts.

"I think because of financial difficulties people are more likely to buy a bunch of flowers than jewellery."

Meanwhile, Moody's announcement also saw the value of the US dollar fall against most major currencies, including the pound, euro and yen.

Federal Reserve chairman Ben Bernanke warned that a default by the US on its debt would cause a "major crisis".

The uncertainty in the US came after Moody's earlier this week condemned Ireland's debt to junk status and fears were raised over the Italian economy.