LONDON -- Gold rose to a record high above US$1,070 an ounce on Wednesday as the dollar slid to 14-month lows against the euro and oil prices rose toward US$75 a barrel, boosting interest in commodities as an asset class.
But the metal slipped in later trade, as analysts speculated gold could be due for a period of consolidation after hitting a series of highs in recent sessions.
Spot gold reached a high of US$1,070.40 an ounce, and was bid at US$1,057.75 an ounce at 1203 GMT (8:03 a.m. EDT) against US$1,063.35 late in New York on Tuesday.
The dollar index, which tracks the currency's performance against a basket of six others, hit its lowest since August 2008 as traders bet on U.S. interest rates staying low, with rising commodities denting its safe-haven appeal.
"As long as they keep selling the dollar there is no reason not to continue to buy gold, and that seems to have been the prevailing sentiment over the last few days," said Ole Hansen, senior manager at Saxo Bank.
"The CRB index has had a 4% lift over the last week, so there has been good appetite for commodities," he said. "Crude oil has started to make a move on the upside ... so that could be the next trigger for an additional shift higher in commodities."
The Reuters-Jeffries CRB index, seen as a global commodities benchmark, rose to two-month highs on Tuesday as oil, base and precious metals prices rallied.
Oil prices extended gains on Wednesday to set a new 2009 high of US$75.17 a barrel, boosted by a weak dollar and surprisingly strong Chinese trade data.
European shares rose to a one-year high as risk appetite was improved by reassuring earnings from Intel and ASML.
But demand for physical gold is still lackluster in key markets as prices hold near record levels. In India, the world's biggest bullion consumer last year, demand was slack despite the onset of the festival period as prices rose.
Among other precious metals, platinum, silver and rhodium also hit their highest levels in more than a year on Wednesday. Platinum touched a peak of US$1,362.50 an ounce in Asian trade, and was later bid at US$1,349.50 against US$1,358.50.
Silver hit a 14-month high of US$18.07 an ounce, and was later at US$17.79 versus US$17.75. The world's main primary silver producer Fresnillo said it sees silver near US$17 to US$18 an ounce for the rest of 2009.
Autocatalyst material rhodium rose US$25 an ounce to a year-high of US$1,725, while palladium was at US$323.50 versus US$325.50. It hit a 14-month high of US$333 on Tuesday.
However, the precious metals may be poised for a correction after rising sharply in recent days.
The 14-day relative strength indicator for gold, which measures the magnitude of price movements, rose as high as 91 on Wednesday, while that of platinum touched 78 and silver 89. A reading above 70 suggests overbought territory.
"(Gold) has moved very quickly, and although we see further U.S. dollar weakness by the end of the year, I think a lot of the flows into gold have probably already happened in anticipation of that," Standard Chartered's head of commodities research Helen Henton told Reuters Television.
"There is good support at about US$1,030 an ounce but clear resistance at US$1,100, so we think although prices are going to stay in the thousands, they will probably pull back from the levels seen today," she added.
Read more: http://www.financialpost.com/story.html?id=2100216#ixzz0TvXDHFCA
The New Financial Post Stock Market Challenge starts in October. You could WIN your share of $60,000 in prizing. Register NOW
