Gold price hits another record high

Updated: Wednesday December 2, 2009 MYT 10:29:50 AM

NEW YORK: Gold prices breached $1,200 an ounce on Tuesday, rallying as the US dollar fell further against other currencies.

The decline in the dollar pushed other metals to their highest levels in more than a year.

Energy futures also rose.

Following a well-established trend, investors sold the dollar and other safe havens like Treasurys and piled into stocks and commodities.

Demand for riskier assets increased as fears over a possible debt crisis in the Middle Eastern city-state of Dubai eased and investors got more good news on the economic recovery in the U.S.

On the New York Mercantile Exchange, gold for February delivery jumped to a new record of $1,204 an ounce before settling at $1,200.20 an ounce, up $17.90, or 1.5 percent, from Monday's close.

Gold has been on a record-breaking climb over the past few months as the dollar weakens.

The precious metal is seen as a good hedge against a weak dollar and potential inflation because of its stable store of value.

Just over a year ago, gold prices hit a low of around $700.

That was at the height of the financial crisis, when investors were dumping stocks and commodities across the board.

The dollar has weakened steadily this year as low interest rates encourage investors to buy assets other than cash, like stocks and commodities, and potentially reap higher returns.

A weaker greenback also makes commodities, which are priced in dollars, more attractive to investors overseas.

The ICE Futures US dollar index, a popular gauge of the dollar's performance, fell 0.5 percent in afternoon trading Tuesday. Major stock indexes, meanwhile, soared more than 1 percent, including the Dow Jones industrial average, which jumped 127 points to its highest close of the year.

Among the day's data, the Institute for Supply Management said new manufacturing activity grew at a slower pace in November, but new orders rose, an encouraging sign that a pickup could materialize in the coming months.

The National Association of Realtors said its index of sales agreements rose in October to the highest level since March 2006. A separate report said construction spending ticked up, another good sign for the housing market.

Elsewhere on the Nymex, March silver surged 68.5 cents, or 3.7 percent, to $19.21 an ounce.

Earlier, silver rose to $19.30, its highest level since March 2008. Copper futures rose to $3.238, their highest since September 2008, before settling up 5.4 cents at $3.231 a pound.

December platinum rose $26.20 to $1,485.70 an ounce. Palladium rose 5 percent.

Oil prices also got a boost from the weaker dollar, as well as a report showing manufacturing activity in China grew for the ninth straight month.

That stirred hopes that Chinese energy demand could pick up.

Light, sweet crude for January delivery rose $1.09 to settle at $78.37.

Heating oil rose 3.01 cents to $2.078 a gallon, while gasoline gained 3.08 cents to $2.0423 a gallon.

Grain prices fell slightly on the Chicago Board of Trade.

March wheat futures slid 4.75 cents to $5.84 a bushel, while corn for March delivery shed 3 cents to $4.145 a bushel.

January soybeans dipped 1 cent to $10.595 a bushel.

December coffee added 0.75 cent to $1.425 a pound, while December cocoa jumped $101 to $3,315 a ton. - AP

(In Kuala Lumpur the price of gold closed at RM130.51 per gramme today, up RM2.12 from yesterday, Bernama reported.)

Latest NYSE, NASDAQ and other business news, from AP-Wire


For latest Bursa Malaysia indices, charts and other information click here

New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com

For Tokyo Stock Exchange click here


Related Stories:
How to diversify investments during this time of crisis



--------------------------------------------------------------------------------
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)