Business | Markets

Gold advances to all-time high

Yellow metal rallies for third straight day after ECB raises rates for first time in three years

  • Bloomberg
  • Published: 00:00 April 8, 2011
  • Gulf News

Gold bars in the Dubai Gold Souq
  • Image Credit: Oliver Clarke/Gulf News Archive
  • Gold bars in the Dubai Gold Souq. According to Standard Chartered, gold will average $1,460 this year, up from a previous forecast of $1,426 and avergae $1,650 next year.

London: Gold climbed to a record for the third straight day on demand for a hedge against inflation.

Gold advanced to an all-time high of $1,466.50 an ounce after the European Central Bank raised interest rates for the first time in almost three years to tame accelerating prices.

The precious metal also gained as fighting in Libya, Japan's nuclear crisis and concerns about European debt boosted demand for the metal as a haven.

"Inflation uncertainty and geopolitical risks are still high," said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland.

"Sovereign bankruptcy in the European periphery is also supporting gold prices."

Gold futures for June delivery rose $2.60, or 0.2 per cent, to $1,461.10 at 10:18am on the Comex in New York. The metal for immediate delivery in London gained as much as 0.4 per cent to a record $1,464.93.

The ECB yesterday raised the benchmark interest rate to 1.25 per cent from a record low of 1 per cent.

"Gold is supported by the view that the dollar will weaken," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.

Gold will average $1,460 this year, up from a previous forecast of $1,426, Standard Chartered Plc said yesterday in a report. Prices will average $1,650 next year, the bank said.

Silver futures for May delivery rose 12.8 cents, or 0.3 per cent, to $39.515 an ounce on the Comex. on Wednesday, the price reached $39.785, the highest since January 1980.

That year, the most-active contract reached a record $50.35.

Palladium futures for June delivery advanced $8.40, or 1.1 per cent, to $793 an ounce on the Nymex. Platinum futures for July delivery gained $6.70, or 0.4 per cent, to $1,804.50 an ounce on the Nymex.

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