Price of gold hits $1,000 on uncertainty

THE PRICE of gold powered through the psychologically-important $1,000 (&pound;606) per ounce barrier yesterday, as the dollar&rsquo;s weakness, concerns about economic recovery and fear of inflation underpinned sentiment.<br /><br />Spot gold rose to $1,007.45 an ounce in early trading, its highest since March 2008, when bullion touched a record high at $1,030.80. Meanwhile US gold futures for December delivery rose to $1,009.4 an ounce.<br /><br />&ldquo;After last week&rsquo;s close above $990 an ounce, the market was basically waiting for an opportunity to get through that $1,000 level,&rdquo; said Tom Kendall, precious metals analyst at Mitsubishi.<br /><br />But the sustainability of the precious metal&rsquo;s rally above $1,000 an ounce, which also helped boost palladium and silver to 2009 highs, was in question.<br /><br />UBS analyst John Reade said that gold options had moved sharply after breaking through $1,000.<br /><br />&ldquo;Today&rsquo;s move in implied volatility suggests that a scramble for upside gold options could lead the spot gold price higher,&rdquo; he said. &ldquo;We are unconvinced that all the ingredients are in place for a sustained surge in gold.&rdquo;<br /><br />Spot gold has now made three attempts to rise and stay above $1,000, including yesterday&rsquo;s push. The market stayed above the key level for one day in February this year and three days in March 2008, when the record $1,030.80 was hit.<br /><br />Some analysts have said the higher gold price reflects uncertainty across markets about how central banks will untangle themselves from fiscal stimulus aimed at reviving economic growth, as well as dollar weakness.<br /><br />&ldquo;Gold is celebrating because the day when inflation might return is getting sooner rather than later," Ashok Shah, chief investment officer at London and Capital.