Gold strikes historic high point

13th October 2010, Comments 0 comments

The price of gold rocketed to another record high on Wednesday, powered by the weakening dollar after the US Federal Reserve signalled that it would consider more pump-priming stimulus measures.

The glamorous metal hit 1,374.35 dollars an ounce approaching 1500 GMT on the London Bullion Market.

"Once again gold dominates the headlines, with yet another new record high," said Rajesh Patel, head trader at trading firm Spread Co in London.

"The catalyst this time? The minutes from the 21st September FOMC released yesterday gave a pretty clear indication, not that it was a surprise to anyone really, that a resumption of QE is 'appropriate before long'."

In foreign exchange deals on Wednesday, the European single currency topped 1.40 dollars as the US unit was under pressure from the prospect of further monetary easing.

A faltering greenback makes dollar-denominated gold cheaper for buyers holding stronger units, pushing up demand for the metal and eventually its price.

Minutes from last month's Federal Open Market Committee (FOMC) meeting had showed Tuesday that the US Federal Reserve anticipates additional stimulus may be needed soon to prop up a slowing economic recovery.

"Such an indication accorded with the members' sense that such accommodation may be appropriate before long, but also made clear that any decisions would depend upon future information about the economic situation and outlook," the minutes read.

That signal fired up expectations the Fed will soon pump money again into the economy through major asset purchases, a measure known as quantitative easing (QE).

© 2010 AFP

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