The price of gold struck a record high level above US$1,215 an ounce in trading yesterday.
Gold hit US$1,215.85 on the London Bullion Market one day after breaking through the US$1,200 barrier for the first time.
After reaching a new high yesterday, gold pulled back slightly to trade at US$1,210.50 at about 0740 GMT.
PHOTO: REUTERS
DEVALUATION
“Gold prices will go up, as will other commodities,” Mark Mobius, chairman of Templeton Asset Management Ltd, said in a Bloomberg Television interview yesterday from Hong Kong.
“It’s basically the devaluation of currencies, which is ongoing and will be ongoing for many years to come,” Mobius said.
Gold has smashed record after record over recent days and weeks on the back of inflationary fears and increasing moves by central banks to diversify assets away from the dollar, which has weakened against the euro and yen.
The yellow metal, whose two main drivers are jewelry and investment buyers, has also won favor in the uncertain economic climate and fears of a mounting Dubai debt crisis. Gold is traditionally viewed as a safe-haven investment.
“It’s really a dollar story,” said Jerry Yoshikoshi, a senior economist with Sumitomo Mitsui Banking Corp in Singapore. “As long as the US authorities neglect a weak dollar, gold prices remain elevated.”
The US Federal Reserve has kept benchmark interest rates close to zero this month in a bid to revive lending after the worst financial crisis since World War II. The US government has boosted spending to combat the recession, pushing the nation’s marketable debt to more than US$6.9 trillion.
The Dollar Index, a six-currency gauge that includes the yen, was little-changed yesterday. Against the euro, the US currency traded near a 16-month low.
PRINTING MONEY
“The main reason is that they continue to print too much money, and people don’t trust governments and banks,” said Jurg Kiener, chief investment officer at Swiss Asia Capital Pte in Singapore.
“We keep buying” gold every day, Kiener said.
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