Gold struck a new all-time peak of almost $868 dollars on Thursday as the precious metal benefited from its safe-haven status amid record high oil, a struggling dollar and Pakistan tensions, analysts said.
The price of gold reached a historic $867,90 an ounce on the London Bullion Market. It later slipped slightly to stand at $866,90.
“The main reason for the increase was that the oil prices have breached the $100 mark. This, and a weakening dollar, has driven gold prices higher,” said Gary Yue, a gold dealer at Delta Asia Financial Group.
“Investors are worried about the oil prices and the weak dollar. When the situation is unstable, they invest their money elsewhere and this has boosted buying interest in gold,” he said.
The precious metal, whose price is also winning support from increased jewellery purchases in emerging economic powerhouses China and India, first smashed its 28-year-old record of $850 an ounce on Wednesday.
According to analysts, current price movements were being slightly exaggerated by the lightness of holiday trade, which meant large transactions could influence the market more than usual.
“With $850 cleared, gold could quite easily find further upside momentum as the background picture of geopolitical tensions and unstable financial markets attracts safe-haven seeking investors,” said James Moore of TheBullionDesk.com.
Political unrest in Pakistan following last week’s assassination of opposition leader Benazir Bhutto has led to fresh interest in gold because the precious metal is regarded as a haven in troubled times.
Higher oil prices also encourage the buying of gold, which is seen as a hedge against inflation, which is being driven in many countries by the surging cost of crude.
Benchmark oil prices hit $100 in New York on Wednesday for the first time, owing to tight supplies and continued strong demand.
Gold prices, which last year rose 30%, were also getting a boost from the weakness of the United States currency, which encourages demand for dollar-priced commodities because it makes them cheaper for buyers using stronger currencies.
“As the dollar outlook remains weak and with further [US] interest rate cuts in store, gold could be poised to challenge the psychological $900 level and subsequently perhaps the $1 000 dollar mark,” said Standard Bank analyst Teo Kah Oon.
The yellow metal spiked to its record of $850 dollars in 1980 as investors rushed to buy gold because of then-high inflation sparked by soaring oil prices amid the Iranian revolution. — AFP