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| Gold at record high of $1,040/oz |
| Bloomberg / Oct 07, 2009, 00:34 IST |
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Weak dollar spurs demand for the metal.
 Gold advanced to an all time high in New York and London as a tumbling dollar spurred demand for the precious metal as an alternative investment.
The dollar fell as much as 0.7 per cent against the euro after Australia unexpectedly raised interest rates and Britain’s Independent newspaper said Arab states held talks on replacing the dollar in oil trades. Saudi Arabia’s central bank and a Kuwaiti minister said there weren’t any negotiations. Gold, trading near a record, tends to gain when the dollar weakens.
“We continue to expect the dollar to weaken as the global economy continues to turn around,” Dan Smith, a Standard Chartered analyst in London, said today. “It’s likely today that gold will retest its previous highs.”
December gold futures gained as much as $11.20, or 1.1 per cent, to $1,029 an ounce on the New York Mercantile Exchange’s Comex division, the highest price since March 2008. Immediate-delivery bullion rose as much as $14.57, or 1.41 per cent, to $1,040.15 an ounce in London and was last at $1,025.58.
“With the dollar back on the defensive, the metal appears on course to challenge” last year’s high, James Moore, an analyst at TheBullionDesk.com in London, said in a note.
Gold futures reached a record $1,033.90 in March 2008. Bullion is heading for a ninth consecutive annual gain, the longest advance since at least 1949. The metal increased to $1,020.25 in the morning “fixing” in London, used by some mining companies to sell production, from $1,005.50 at yesterday’s afternoon fixing.
Australian interest rates
The dollar weakened after Australia’s central bank raised its benchmark rate a quarter point to 3.25 per cent and signaled further increases. Saudi Arabia’s central bank Governor Muhammad al-Jasser and Kuwaiti Oil Minister Sheikh Ahmed Al-Abdullah Al- Sabah denied any talks were held. The Independent said Persian Gulf states along with Japan and China discussed dropping the dollar, citing unnamed sources.
Gold futures have risen about 2.9 per cent in the past month as the US Dollar Index, a six-currency gauge of the greenback’s value, fell 2.2 per cent. The measure slid to a 13-month low on September 23. Australia’s interest rate hike “shows that people are starting to look ahead and worry about inflation” and “that’s another positive factor for gold,” Smith said.
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