BackGold advances to a new high as dollar takes another beating
Gold advances to a new high as dollar takes another beating
PremiumSingapore / London: Gold rose to a record on Wednesday in London and New York as the dollar fell for a third day, spurring demand for the metal as a hedge against further weakness.
The Dollar Index, a six-currency gauge of the greenback’s performance, slipped as much as 0.3% to a 15-month low. Gold jumped 5.6% in the past month in London as the currency index lost 1.8% and as news last week of Indian and Sri Lankan government bullion purchases raised speculation that other countries would follow suit.
Gold prices rallied to a record Rs16,780 per 10g on the bullion market in Mumbai, PTI reported.
“The dollar has been weakening," said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “The market is also concerned about central banks’ interest in buying gold. We would not be surprised to see the market testing $1,200 an ounce by the end of the year."
Gold for immediate delivery rose as much as $11.53, or 1%, to $1,117.33 an ounce in London and traded at $1,115.84 by 9.30am local time. December gold futures gained for an eighth session on the New York Mercantile Exchange’s Comex division, climbing as much as 1.4% to $1,117.80 an ounce, and were last at $1,116.20.
“The real thing is what’s the value of paper money," said John Hathaway, managing director at Tocqueville Asset Management Lp and manager of the Tocqueville Gold Fund. “Frankly, it depends on what happens in the next three years to the efforts of the (US) Federal Reserve and other world central banks to bring about an economic recovery."
Governments in the US and other nations have cut interest rates and boosted spending to fight the worst recession since World War II, spurring some investors to buy bullion as a hedge against potential inflation and currency debasement.
“Would they be able to retract the liquidity they put into place?" Hathaway said in a Bloomberg Television interview on Wednesday. “If they have a hard time doing it, I think we’ll see inflation and gold will go much higher."
India’s central bank last month bought 200 tonnes of gold from the International Monetary Fund for $6.7 billion. That prompted analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital to forecast further buying by central banks, the biggest owners of gold.
PTI contributed to this story.
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