Gold shines at new record high near 868 dollars
LONDON (AFP) — Gold struck a new all-time peak of almost 868 dollars on Thursday as the precious metal benefited from its safe-haven status amid record high oil, a struggling dollar and Pakistan tensions.
The price of gold reached a historic 867.90 dollars an ounce on the London Bullion Market. It later slipped slightly to stand at 866.90 dollars.
"The main reason for the increase was that the oil prices have breached through the 100-dollar mark. This and a weakening dollar, has driven the gold prices higher," said Gary Yue, a gold dealer at Delta Asia Financial Group.
"Investors are worried about the oil prices and the weak dollar. When the situation is unstable, they invest their money elsewhere and this has boosted the buying interest in gold," he said.
The precious metal, also being supported by increased jewellery purchases in emerging economic powerhouses China and India, had first smashed its 28 year-old record of 850 dollars an ounce on Wednesday.
According to analysts, current price movements were being slightly exaggerated by the lightness of holiday trade, which meant large transactions could influence the market more than usual.
"With 850 dollars cleared, gold could quite easily find further upside momentum as the background picture of geo-political tensions and unstable financial markets attracts safe-haven seeking investors," said James Moore of TheBullionDesk.com.
Political unrest in Pakistan following last week's assassination of the country's opposition leader Benazir Bhutto has led to fresh interest in gold because the precious metal is regarded as a haven in troubled times.
Higher oil prices also encourage the buying of gold. The precious metal is seen as a defence against inflation, which is being driven in many countries by the surging cost of crude oil.
Benchmark oil prices hit 100 dollars in New York on Wednesday for the first time owing to tight supplies of crude amid solid demand for the commodity.
Gold prices, which last year rose by 30 percent, were also winning support from the weakness of the US currency, which encourages demand for dollar-priced commodities because it makes them cheaper for buyers using stronger currencies.
"As the dollar outlook remains weak and with further (US) interest rate cuts in store, gold could be poised to challenge the psychological 900 dollar level and subsequently perhaps the 1,000 dollar mark," said Standard Bank analyst Teo Kah Oon.
The yellow metal had spiked to its record of 850 dollars an ounce in 1980 as investors rushed to buy gold because of then high inflation sparked by soaring oil prices amid the Iranian revolution.
