Metals - Gold close to record as dollar plunges to new depths

Thomson Financial
Friday November 9, 2007

Gold remained close to a 28-year high as the dollar plunged to unprecedented depths against major currencies and after Ben Bernanke, chairman of the Federal Reserve, yesterday warned of increasing inflationary pressures.

The precious metal moves in the opposite direction to the dollar as gold is seen as an alternative asset and rises when inflation jitters hit the markets because it is seen as a hedge.

Near-record oil prices, meanwhile, also seen as a key sign of inflation, also lent the metal support.

Some bouts of profit-taking, however, erased some of gold's recent sharp gains.

Standard Bank analyst said while the precious metal's rally towards the record price has stalled somewhat, gold is still 'riding high' on dollar weakness.

At 9.33 am, spot gold was trading at 835.80 usd an ounce, against 834.50 usd in late New York trade yesterday, having hit 845.58 usd on Wednesday, its peak value in almost 30 years.

Gold fetched its highest ever price in January 1980 of 850 usd per ounce.

Full article here.