Gold Passes $1,700

Lewa Pardomuan at Reuters:

Bullion roared to record highs above $1,700 an ounce on Monday as an unprecedented downgrade to the U.S. credit rating sent investors scrambling out of riskier assets, hammering equity markets and the dollar.

The ask is $1705.25 at the time of writing. It was curious to see gold fall with the market on Thursday’s massive loss. My guess: lots of investors were subject to margin calls as a result of the drop and had to sell assets that were still worth something to cover them. It makes sense to see a rise in gold directly afterwards, because the margin-covering sales were suppressing the price. I don’t know this for a fact, but suspect there is a positive correlation between the VIX and the price of gold.