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.
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.
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.
The Australian rate hike – the first of any G20 country since the financial crisis took hold – boosted appetite for risk.
The nation hiked its rate by 25 basis points to 3.25 per cent in a sign of economic recovery hopes.
The gold surge also came after reports that the Gulf Arab states were plotting to exit their investments in the dollar – adding to the currency’s woes and sending more investors running for precious metals.
A number of the countries involved, including Kuwait and Saudi Arabia, have denied holding discussions over the currency.
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.