Gold price breaks 28 yr
record to hit new peak
Unrest in Pakistan, a faltering dollar and
surging oil futures sent the price of gold soaring to a record
high on Wednesday, beating its previous highest level set 28
The precious metal rose to 859.20 US dollars an ounce,
smashing its peak of 850 US dollars reached on January 21,
It later slipped back to 857.75 US dollars on profit-taking.
Price movements were slightly exaggerated by the lightness of
holiday trade, which meant large transactions could influence
the market more than usual, analysts said.
"Although conditions remain on the thin side ... (gold's) move
suggests that funds may have made additional moves into
bullion with Pakistan remaining on edge and investors nervous
about financial markets," said Kitco Bullion Dealers' analyst
"A sharp rise in crude oil ... and a softer US dollar"
contributed to gold's rally, he added.
Political unrest in Pakistan has led to interest in gold
because the precious metal is regarded as a haven in troubled
Benchmark oil prices hit 100 US dollars in New York on
Wednesday for the first time in history.
The yellow metal spiked to its record in 1980 as investors
rushed to buy gold because of high inflation sparked by
soaring oil prices amid the Iranian revolution.
Gold rallied "as the dollar remained in negative territory
while safe-haven related buying continued to be seen in
reaction to violence in Pakistan," said James Moore of
Gold prices were also winning support from a weak dollar,
which fell against the euro on Wednesday in the wake of
disappointing US manufacturing data, dealers said.
A falling US unit encourages demand for dollar-priced
commodities such as gold because it makes them cheaper for
buyers using stronger currencies. Higher oil prices also
encourage the buying of gold.
Gold is seen as a defence against inflation, which is being
driven in many countries by higher oil prices.
The price of crude hit 100 US dollars per barrel in New York
for the first time in history, supported by unrest in oil
producer Nigeria and the prospect of falling energy
inventories in the United States, dealers said.
The price of gold is also rising sharply because of increased
jewellery purchases in emerging economic powerhouses China and
India, according to the World Gold Council.