Gold surges as traders ditch dollar

THE PRICEof gold surged to an all-time high of over $1,040 a troy ounce yesterday, as falls in the USdollar caused investors to go on the hunt for alternatives.<br /><br />A surprise interest rate rise in Australia contributed to the US currency falls, as the higher yields on offer Down Under caused traders to ditch the dollar. <br /><br />Spot gold prices rose as high as $1,043.45 an ounce during intra-day trading yesterday, while US gold futures were as high as $1,045 an ounce in New York. <br /><br />The Australian rate hike &ndash; the first of any G20 country since the financial crisis took hold &ndash; boosted appetite for risk.<br /><br />The nation hiked its rate by 25 basis points to 3.25 per cent in a sign of economic recovery hopes. <br /><br />The gold surge also came after reports that the Gulf Arab states were plotting to exit their investments in the dollar &ndash; adding to the currency&rsquo;s woes and sending more investors running for precious metals. <br /><br />A number of the countries involved, including Kuwait and Saudi Arabia, have denied holding discussions over the currency. <br /><br />And City forex traders dismissed such a plot, noting the strong economic and political ties between the United States and Saudi Arabia, but nonetheless recognised that such reports reflect the dollar-negative mood of the market.