London: Gold gained the highest in more than 27 years in London as investors sought a hedge against inflation on speculation the Federal Reserve will cut interest rates to protect the economy from turmoil in credit markets.
Platinum also rose to the strongest since May after Fed Chairman Ben Bernanke said on Thursday the sell-off in money markets may worsen a housing recession. Gold has advanced 12% and the dollar dropped 3% to a record low against the euro since the start of July as a crisis in the US subprime mortgage market spread. Oil prices also rose to a record.
“It’s no longer just a question of people being concerned about interest rates going down, it’s more about inflation and concern for the US economy,” Rhona O’Connell, managing director of GFMS Analytics Ltd, a London-based research venture between GFMS Ltd and ROC Consultancy Ltd, said on Friday.
Gold for immediate delivery gained as much as $6.04 (Rs241), or 0.8%, to $739.30 an ounce (28.35gm) in London—the highest since January 1980. Silver rose 15 cents, or 1.1%, to $13.51 an ounce— the highest compared with closing prices since 6 June.
Gold may reach $765 an ounce as early as next week, James Moore, an analyst with London-based TheBullionDesk.com, said in an interview.
Five of the past six bear markets for the dollar boosted prices of the metal. The US currency on Friday fell to a record low against the euro for a second day.