Gold is set to continue its record run this year after finishing 2007 at its highest level in nearly three decades.
The yellow metal ended the year worth $833.70 per ounce on the spot market, up more than 30 per cent on the year and near its all-time high of $850 per ounce, reached in 1980 amid the fallout from the Iranian revolution and the Soviet Union's invasion of Af-ghanistan.
Analysts predicted that its value would continue its unprecedented upswing, now seven years running, amid continuing economic and geopolitical turmoil.
Before receding slightly on 31 December, the metal got a final boost to reach $841.30 in the aftermath of the assassination of Benazir Bhutto, the Pakistani opposition leader, which increased fears of a political meltdown in the nuclear-armed state.
Seen as a safe-haven investment, the metal does best when many other factors are at their worst. With uncertainty in the market about how long the global credit crisis will drag on, the falling value of the US dollar and fears about tightening oil supply, "gold is likely to consolidate its impressive gains made in 2007", according to a report from Standard Bank.
The price has also been helped by falling mining production, which dropped by about 1 per cent last year due to a sharp decrease in South Africa, home to the world's largest deposits.
The weakness of the dollar has also contributed greatly to the strong run of the metal, which is denominated in the US currency and thus becomes more valuable for investors in other currencies as the greenback falls. Expectations of further dollar weakening, fed by expected interest rate cuts in America after the three already pushed through last year by the US Federal Reserve to halt the collapse of the housing market, has led analysts to predict that the gold price will continue to rise. Some cautioned, however, that it could hit a short-term speed bump as investors sell out and take profits but that the overall geopolitical and economic picture bodes well for the price of the metal.
Ian Cochran, head of the gold mining giant Goldfields, said last year that he was "quite comfortable about gold at $1,200 per ounce in the next 24 months." Even at those levels, in inflation-adjusted terms, it still has a long way to reach the equivalent of the $850 level it reached in 1980. In today's market, that would equal about $2,000 per ounce.
Last year was also a record year for several commodities, including iron ore, the base material for steel, which sky-rocketed thanks to demand from an industrialising China. The spot price of North Sea crude oil ended the year at $93.81 per barrel, up about 85 per cent. Again, this was due mainly to rising demand from China and India and fears over a supply squeeze amid continued strife in Iraq.Reuse content