Stephen Bernard
RTGAM



New York - Gold surged to a new record Wednesday as investors remain skeptical of the long-term value of the euro.

Silver also climbed to a new high as gold's surge lifted the prices of other precious metals.

Gold jumped to a record high of $1,245.40 (U.S.) an ounce early Wednesday before easing slightly. Gold for June delivery rose $19.70 to $1,239.90 an ounce in early afternoon trading.

Even though European leaders agreed earlier this week to a nearly $1-trillion bailout program to support debt-burdened countries like Greece, investors are still skittish about whether weak European countries will be able to get their debt under control through cost-cutting. That uncertainty has driven investors away from the euro, which is used by 16 countries, and toward safer investments like gold.

Analysts say high debt levels in countries beyond Europe have led traders to reconsider how much to invest in currencies altogether.

"Clearly gold has become the only reserve currency not backed by debt," said James DiGeorgia, publisher of GoldandEnergyAdvisor.com. Mr. DiGeorgia said gold could climb as high as $1,500 an ounce this year.

The rise in gold, particularly over the past couple of days, comes even as stocks recover from a sharp drop last week. After an initial rally, the euro has fallen back again against the U.S. dollar and is now hovering near 14-month lows as currency traders remain skeptical of how effective Europe's bailout plan will be in protecting the euro.

That weakness has opened the door for gold, which has seen heavy trading volume in recent days.

George Gero, vice-president at RBC Global Futures, said there are increasing signs of long-term investor interest in gold, including already strong trading volume for December gold futures.

Silver has also benefited as investors seek safety in precious metals. July silver touched a record high of $19.735 an ounce early in the day. In afternoon trading, it rose 34.6 cents to $19.64 an ounce.

July platinum rose $32.80 to $1,733.60 an ounce, while June palladium rose $13.05, or 2.5 per cent, to $545.25 an ounce.