Gold hit fresh record highs near US$1,150 (HK$8,970) an ounce yesterday, boosting precious metals across the board, as a dip in the dollar index added to momentum buying while prices broke through key technical resistance levels.
In non-US dollar terms, gold also climbed, hitting multi-month highs when priced in the euro, sterling and the Australian dollar.
Spot gold hit a high of US$1,149.15 and was at US$1,147.30 an ounce London afternoon trade.
The market is being underpinned by fresh interest in gold from governments after a recent major bullion acquisition from India and smaller buys by the central banks of Mauritius and Sri Lanka, said Afshin Nabavi, head of trading at MKS Finance in Geneva.
The acquisitions underlined gold's appeal as a portfolio diversifier, especially in an environment where further dollar weakness was expected, analysts said.
Such expectations were strengthened by the latest batch of US economic data.
Construction of new homes in the United States fell sharply last month, showing potential weakness in the economy's recovery, while consumer prices rose slightly more than expected.
The Commerce Department said yesterday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January.
"The trickle-down effect of the housing number is going to be amazing," warned Dan Cook, senior market analyst at IG Markets, Chicago. "It's likely that more construction crews will get cut after this ... This is not good news at all."
The consumer price index, meanwhile, rose 0.3 percent, a touch above market expectations for a 0.2 percent increase. Besides gold, other commodities also climbed, with oil rising back towards US$80 a barrel and copper to 13 month highs near US$7,000 a tonne helped by a weak dollar. REUTERS
