Gold prices hit record, crude continues to rise

Gold prices hit record, crude continues to rise

London: Gold hit a record high above $1,437 (Rs64,809) an ounce on Wednesday as violence in the Middle East and North Africa supported interest in the precious metal as a haven from risk, and as US oil prices jumped above $100 per barrel.

Spot gold was bid at $1,435.65 an ounce at 1522 GMT against $1,433.70 late in New York on Tuesday, having earlier peaked at an all-time high of $1,437.97. The metal fixed at $1,435.50 an ounce at 1500 GMT. US gold futures for April delivery rose $5.10 to $1,436.30, after hitting a record $1,439 earlier.

Gold is building on a 6% rise in February, its biggest one-month climb since August. This came on the back of unrest that unseated leaders in Tunisia and Egypt before spreading to Libya, Bahrain, Yemen, Oman and elsewhere.

“(There is) a combination of reasons for (the rise in) gold, but primary at the moment are strong oil and weak equities—basically geopolitical," said Simon Weeks, head of precious metals at The Bank of Nova Scotia.

“I think we see $1,450, and that’s probably enough," he added. “Any good news from the Middle East will see a pullback to $1,400."

Moammer Gadhafi launched an offensive to retake territory in Libya’s east on Wednesday, sparking a rebel warning that foreign armed forces might be needed to “put the nail in his coffin" and end his long rule.

The US has sent warships towards Libya and secretary of state Hillary Clinton has said the country and its NATO (North Atlantic Treaty Organization) allies are still considering a “no-fly" zone over Libya, though Western states appear hesitant to stage an intervention.

In opening remarks to a meeting of Arab foreign ministers in Cairo on Wednesday, Iraqi foreign minister Hoshyar Zebari said the Libya crisis is an internal Arab affair and foreign powers should refrain from any intervention.

Violence in the region cooled appetite for assets seen as higher risk, such as stocks, and boosted so-called safe havens such as German government bonds, the Swiss franc and gold. It also fuelled further gains in oil. Brent crude rose towards $116 per barrel on Wednesday after settling at a near two-and-a-half year high, while US crude edged above $100.