Gold jumps to record high

LONDON: Gold rose to a record high on speculation that inflation will accelerate and erode the value of the US dollar, boosting the appeal of the precious metal for investors seeking to preserve their wealth.

Gold was also boosted by a sharp drop in the greenback on a report, later denied, that Gulf Arab states were considering abandoning it for oil trading. Gold futures climbed as high as US$1,038.95 (S$1,453.40) an ounce in New York, topping the previous record of US$1,033.90 in March 2008.

The spot price headed for a ninth straight annual gain, the longest rally since at least 1948. The US dollar fell as much as 0.6 per cent against a basket of six major currencies.

‘Gold is acting like the ultimate currency,’ said Mr Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California. ‘Everyone’s concerned about the dollar, but it’s not like you can hate the dollar and fall in love with the euro or the yen.’

The reason is that central banks are following the same monetary course and trying to stimulate and inflate their way back to growth.

‘Even without the weak US dollar, gold is performing quite well,’ said senior Commerzbank trader Michael Kempinski.

Gold yesterday hit six-month highs when priced in sterling and euros, breaking above \244700 (S$1,445.20) an ounce for the first time since early April.

Mr Peter Fertig, a consultant at Quantitative Commodity Research, said the final quarter was typically strong for gold, due to rising jewellery demand and as the US dollar is seasonally soft.

BLOOMBERG, REUTERS

Source: Straits Times (subscribers only)

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