Gold smashes through 1,400-dollar mark for first time

8th November 2010, Comments 0 comments

Gold soared past the 1,400-dollar per ounce mark for the first time on Monday in a buoyant market boosted by speculative investors.

The spot price of gold rose to 1,403.88 dollars at 1720 GMT before reaching a new all-time high of 1,407.20 dollars at 1730 GMT.

Gold was driven up by the Federal Reserve's decision last week to carry out a 600-billion-dollar monetary stimulus measure aimed at reviving the US economy, a move seen in some circles as liable to aggravate inflation.

"The resurfacing of inflationary concerns in the medium term has boosted interest in the precious metals and the strength in the dollar was sidelined," said Suki Cooper, an analyst at Barclays Capital.

Gold is seen as a safe haven in times of inflation.

Bullion normally moves inversely to the dollar, which fell to a nine-month low versus the euro last week.

Silver was also boosted, reaching a new 30-year high of 27.64 dollars an ounce.

Earlier Monday, World Bank president Robert Zoellick called on bickering G20 nations to bring gold back into the global monetary system as an anchor to guide currency movements.

Ahead of a Group of 20 summit this week in Seoul, Zoellick said an updated gold standard could help retool the world economy at a time of serious tensions over currencies and US monetary policy.

He said the world needed a new regime to succeed the "Bretton Woods II" system of floating currencies, which has been in place since the fixed-rate currency system linked to gold broke down in 1971.

"The (new) system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," Zoellick said in a commentary piece in the Financial Times.

© 2010 AFP

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