LONDON, 4 January 2007 — Gold struck a new all-time peak above $866 yesterday as the precious metal benefited from its safe haven status amid record high oil prices, a struggling dollar and tensions in Pakistan. The price of gold reached an historic $866.53 an ounce on the London Bullion Market. It later slipped back slightly to stand at $865.76.
“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 jewelry 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 geo-political 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.