Gold hits record high, dollar falls

Published: 7/10/2009 at 05:40 AM
Online news: Breakingnews

London - The price of gold struck an all-time high of $1,043.78 early on Wednesday as the dollar fell to 33.4 baht on reports of a plan by Gulf states to stop using the greenback for oil trading.

Gold hit 1,045.00 dollars per ounce on the New York Mercantile Exchange in late trades.

Hours earlier on the London Bullion Market, gold surged to beat the previous record high of $1,032.70 an ounce struck in March, 2008.

Barclays Capital precious metals analyst Suki Cooper said dollar weakness appeared to be related to reported secret talks about oil being priced in a basket of currencies including gold rather than the dollar,

This "has added to concerns about the future role of the dollar in international financial markets," Cooper said.

The dollar's future as the world's top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.

Arab states have launched steps with China, Russia, Japan and France to stop using the dollar for oil trades, British daily The Independent reported on Tuesday, but the report was denied by Kuwait and Qatar and reportedly by other nations.

The Independent's Middle East correspondent Robert Fisk wrote in his paper: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning -- along with China, Russia, Japan and France -- to end dollar dealings for oil."

They would instead switch "to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar," added Fisk.

Gold, viewed as a safe-haven investment, has won back favour in recent months as the global economy struggles out of its worst slump in decades.

The run-up in gold has been largely driven by weakness in the dollar, which makes dollar-priced commodities cheaper for holders of stronger currencies, boosting demand.

Gold also wins support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.

Precious metals consultancy GFMS last month warned that the current upward trend in gold may not be sustainable should global stimulus packages fail to boost flagging demand in the battered world economy and inflation fall as a result.

The Group of 20 leaders of emerging and developed nations recently agreed at a summit in Pittsburgh not to roll back massive stimulus measures that helped contain a severe global recession. (AFP)

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Pointman #2

Discussion 1 : 07/10/2009 at 11:38 AM1
Don't be fooled, or mislead by the article. The U.S. Dollar declined, but Gold prices went up. Since the United States owns 78% of the world's Gold, the higher Gold prices go, the richer the U.S. becomes. How much Gold does the USA have? If 1/8 of IMF Gold reserves amount to over 400 tons, then the United States, has, well you figure it out. On the other hand, China doesn't own 1% of the world's Gold. I defenitely, would want to be the guy sitting there with all those Gold reserves. Therefore, don't fret too much about the U.S. Dollar. In fact, I see a quick way to wipe out the U.S. debt, but I'll refraim from discussing that issue.

Pointman #2

Discussion 1 : 07/10/2009 at 11:38 AM1

Don't be fooled, or mislead by the article. The U.S. Dollar declined, but Gold prices went up. Since the United States owns 78% of the world's Gold, the higher Gold prices go, the richer the U.S. becomes. How much Gold does the USA have? If 1/8 of IMF Gold reserves amount to over 400 tons, then the United States, has, well you figure it out. On the other hand, China doesn't own 1% of the world's Gold. I defenitely, would want to be the guy sitting there with all those Gold reserves. Therefore, don't fret too much about the U.S. Dollar. In fact, I see a quick way to wipe out the U.S. debt, but I'll refraim from discussing that issue.

Gold hits record high, dollar falls