Gold price strikes $1,000 per ounce for first time
Foreign Desk Report

LONDON—The price of gold soared to a record high 1,000.45 dollars per ounce on Thursday, as the precious metal benefited from the weak dollar and its safe-haven status amid fears of rising inflation.
Investors are funnelling their cash into commodities like gold as they seek refuge from volatile world stock markets, the plunging value of the dollar and growing fears about a US-led economic slowdown, traders said. After reaching the milestone, gold stood at 997.54 dollars per ounce on the London Bullion Market, which compared with 975.50 dollars late on Wednesday.
“Ongoing inflationary pressure from rising oil prices and continued concerns about the US economy and credit liquidity have led sentiment to turn more positive,” said James Moore, analyst at TheBullionDesk.com. He added: “Trading conditions remained choppy in the precious metal.” Demand for the glamorous metal, which is used in jewellery, dentistry and electronics, is spearheaded by Asian economic giants China and India.
Gold, which is priced in dollars, becomes cheaper for buyers using other currencies when the US unit falls in value. The greenback slumped on Thursday against both the European single currency and the yen as fresh credit jitters swept across global markets, dealers said.
Many analysts now expect the US Federal Reserve to slash its key lending rate at a scheduled meeting next week in a bid to ward off a potential US recession. Investors generally prefer the currencies of countries that have higher interest rates as they can reap better yields.
On the foreign exchange market on Thursday, the euro jumped as high as 1.5625 dollars amid mounting concerns over the US economy, dealers said. The dollar also plunged below the key 100 yen level for the first time in 12 years, falling as low as 99.78 yen.
“The gold-favourable environment continues to evolve positively for the metal, with expectations of further Fed rate cuts and inflationary concerns boosting safe haven buying,” said analysts at Barclays Capital.
Gold has risen by about 17 percent so far this year, underscored also by supply problems in South Africa — which is the world’s largest producer. At the start of January, the metal jumped above 850 dollars per ounce, smashing a 28-ye ar-old record, and has been on an upward trend ever since.
The precious metal is regarded as a safe haven in times of economic uncertainty and rising inflation. “Ongoing inflationary pressure from rising oil prices and continued concerns about the US economy and credit liquidity have led sentiment to turn more positive,” said James Moore, analyst at TheBullionDesk.com. He added: “Trading conditions remained choppy in the precious metal.”
At present, there are widespread fears that the US economy is lurching into recession and record oil prices of almost 111 dollars per barrel have stoked those inflationary pressures.
Global demand for gold is also surging owing to increased jewellery purchases in China and India, according to the World Gold Council. Demand was additionally being fuelled by higher purchases of the metal by industry and wealthy individuals, it added.