Tuesday, April 26, 2011

Gold jumps to record high price on fears of US dollar tumble


Gold jumps to new record price as dollar falls further

Analysts believe the price of gold is going to go even higher.

The price of gold has hit a new record high, caused by a weaker US dollar and the continuing problems in the Middle East and North Africa.

Spot gold rose to $1,513.70 (£917.60) an ounce during early trading in Asia, before retreating.

Investors buy precious metals as a safe investment to guard against inflation and recent geopolitical turmoil. These are somtimes known as a "hedge" or safe funds.

Dealers say gold could even trade as high as $1,520 an ounce.

A weak US dollar is generally asociated  with higher gold prices, as both are seen as safe investments.

Monday was the seventh consecutive trading session that saw the price of gold rise.

"It's the dollar play," said a Singapore-based dealer. "There is more room for prices to go even higher."

On Wednesday, the chairman of the US Federal Reserve, Ben Bernanke, is expected to affirm the commitment of America's central bank to quantitative easing, a programme to flood money markets with liquidity.

That also tends to drive down the value of the dollar.

Analysts say the prospect of low interest rates in the US is causing investors seeking better returns towards buying gold.

Investors continue to react nervously to the uncertainty in the Middle East. An escalation in violence in Yemen and Syria over the weekend has also helped the price of gold strengthen.

Gold is not the only precious metal enjoying a rally, as silver is also on the rise.

Spot silver, sometimes called the poor man's gold, hit $47.88 an ounce, the highest price since 1980.