On the New York Mercantile Exchange, the contract rates on Tuesday for one ounce of gold, that is to be delivered in August 2008, reached an astonishing figure of  $923.3.As per consultants, the rates might go on to as high as $1000 per ounce by next month.

Why is gold so hot? The global commodity boom is responsible for raising gold prices sky-high. The prices of metals such as copper and  steel have all risen sharply, along with prices of essential commodities like sugar, soybeans, oil, and natural gas. The increasing industrial and consumer bases in developing countries such as China and India is also having an effect. While the production of most of these commodities is increasing, it is unable to keep pace with with demand, or with the expected future demand. At a rather simplistic level , prices are going up  because the demand for gold has increased.

It is unlikely that the trend will change anytime soon. As long as the global boom continues, the rising demand will continue to push the gold prices higher. Even if the boom subsides, the resulting inflation will ensure further increase in the price of gold.