Gold continues its rally to record highs on global worries
Gold climbed to a new fresh high at $1414.60, despite the dollar's advance, on global debt woes from Europe, fears of negative repercussions from US monetary, and China's stricter policies.
Yesterday, gold added $16.10 or 1.15% an ounce to close at $1409.27 an ounce, while gold price was setin London at $1390.00 per ounce inclining from $1388.50 during the AM fixing.
SPDR gold trust, the world's largest exchange-traded fund backed by bullion, rose to 1,294.19 metric tons from 1,291.76 on November 2.
First, in Europe the debt agony continues as Portugal prepares to sell 10-year bonds worth 10 billion euros. Ireland unleashed a new budget plan last week to raise as much as 6 billion euros by 2011 to avoid the Greek-style rescue.
The highly indebted countries are threatening recovery prospects in the euro zone causing the euro to drop for the third consecutive session against majors.
Second, ahead of the G-20 meeting this weekend, leaders criticized the $600 billion stimulus announced by the Fed last week as German Finance Minister Wolfgang Schaeuble described U.S. decision as "clueless" since it may weaken the dollar and raise commodity prices, while China said it may cause asset bubbles.
The Fed's decision raised some concerns as the package came higher than expectations of $500 billion which enhanced gold as a safe haven as the world's largest economy seem to be suffering.
Third, risk aversion increased by investors as China puts stricter regulations on capital inflows as it mentioned it will curb the flow of "hot money" into its economy, causing Asian shares to fall and yen and dollar to strengthen.
The dollar index, which tracks the movements of the dollar versus six major currencies, rose for the third day to a high of 77.37 compared with the day's opening at 77.04, yet it did not prevent gold from breaching new high records but it weighed on oil which slid to a low of $86.42 a barrel from the opening price of $86.72.
Among other precious metals, platinum was little changed hovering around $1772.00, palladium inched up to $712.50 from $710.20, and silver plunged to $27.80 from 28.02, as of 09:55 GMT.
