Gold price breaking out to new all-time record highs

The gold price surged to a new all-time high Thursday morning, rising to $1,589 per ounce. The price of gold has risen 4.9% in July on the back of waning confidence in fiat currencies and renewed speculation that the Federal Reserve may consider a new round of quantitative easing. Silver, despite being well off its multi-decade high print of $49.79 posted earlier this year, has climbed 6.5% this month and is currently trading at $36.95 per ounce.

While the Fed continues to debate the prospects of QE3, the gold market appears to have already made up its mind. With the gold price breaking out to new all-time record highs, investors are betting that a third round of money printing is not too far away.

Across the Atlantic, while turmoil in Italy and Greece has supported the gold price in recent days, the baton was passed to Ireland on Tuesday. Moody’s cut Ireland’s credit rating from Baa3 to Ba1, placing it in junk territory. The ratings agency also placed its Irish rating on outlook negative, indicating an increased likelihood of a further downgrade.

In its report, Moody’s wrote that “The main driver of today’s downgrade is the growing likelihood that participation of existing investors may be required as a pre-condition for any future rounds of official financing, should Ireland be unable to borrow at sustainable rates in the capital markets after the end of the current EU/IMF support programme at year-end 2013.”

The Irish downgrade not only boosted the gold price, but helped pressure on the euro below 1.40 against the U.S. dollar. As a result, the euro-denominated price of gold reached a new all-time high for the second straight day, climbing to €1,122.03 per ounce.