Gold powers to all-time high as Zoellick calls for new system

 
City A.M. Reporter
GOLD powered to an all-time high above $1,400 (£868) an ounce yesterday, despite a bounce in the dollar, as investors sought an inflation hedge from the Federal Reserve’s massive bond-buying programme.

Gold has risen almost six per cent since just before the Federal Reserve detailed its plans last Wednesday to buy $600bn worth of Treasuries to revive the economy.

Underlying support helped lift the metal after comments from World Bank president Robert Zoellick in the Financial Times calling for leading economies to consider readopting a modified global gold standard to guide currency movements, although most analysts deemed it unrealistic.

Zoellick called for a system that “is likely to need to involve the dollar, the euro, the yen, the pound and (yuan) that moves towards internationalisation and then an open capital account.”

“Gold could potentially play a small role in the overall framework, but I don’t think we are in a position to go back to a gold standard,” said commodities strategist Nic Brown of Natixis. Analysts also said that the gold market is too small to absorb such demand.