Gold hits $700 an ounce

NEW YORK — Gold prices surged Tuesday above $700 an ounce — a level not reached since 1980 — as funds bought into the market, driven by weakness in the dollar, political tension in the Middle East and overall upward momentum in the commodities markets.

These persistent factors have been pushing gold prices to multi-decade records for months now. Gold has risen 40 percent since late November, when for the first time in two decades the most-active contract broke through $500 an ounce.

Surpassing $700 an ounce “is important, insofar as it reinforces the overall uptrend of the market. There are people looking for much, much higher,” said Bernard Hunter, director of precious metals at Scotia Mocatta, a division of the Bank of Nova Scotia.

Hunter said prices will likely consolidate at this level, then once again start heading higher. Some market watchers are expecting gold to breach the $1,000-an-ounce mark.

June gold futures on the New York Mercantile Exchange rose to a peak of $702.20 an ounce Tuesday, before settling at $701.50 an ounce, up $21.60 on the day.

The main factors contributing to funds’ recent interest in buying gold futures are geopolitical worries, mining hindrances, and a falling dollar, which typically encourages investors to turn to gold, considered a safer alternative to the U.S. currency.