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Gold breaks new records on dollar fears

07 October 2009 14:57 (UTC +04:00)

Baku. APA-Economics. The dollar traded mixed on Wednesday as investors digested the outlook for the greenback as a global currency, while gold prices hit another historic peak, AFP reported.
In commodity trading here, gold struck another record high point of 1,048.43 dollars an ounce. Elsewhere dealers braced for the start of the third-quarter company earnings season in the United States.
In late morning London deals, the European single currency eased to 1.4710 dollars from 1.4715 dollars late in New York on Tuesday.
Against the Japanese currency, the dollar slid to 88.23 yen from 88.82 yen on Tuesday.
The greenback had fallen sharply on Tuesday, hit by an Australian interest rate hike and a British media report that Gulf states were planning to stop using the US unit for oil transactions, traders said.
As a result, gold prices have since been catapulted to a series of record highs. A struggling dollar lifts gold as the dollar-denominated commodity becomes cheaper for buyers using stronger currencies.
"The dollar took a battering yesterday following a report in the UK press that OPEC was in secret talks with China, Japan, Russia and France to abandon pricing oil in dollars and move on to pricing in a basket of currencies," said PVM analyst David Hufton.
"The report has been denied but the news, together with an unexpected rise in Australian interest rates, hit the dollar hard."
Australia became the first of the worldâ€™s major economies on Tuesday to tighten its monetary policy since the financial crisis erupted two years ago.
The Reserve Bank of Australiaâ€™s decision "reflected an improved global economic outlook," said NAB Capital strategist John Kyriakopoulos.
Dealers sold off the dollar in response to the move and hunted for better returns in commodity currencies.
The Independent had reported on Tuesday that Gulf states, together with China, Russia, Japan and France, were considering replacing the dollar as the pricing currency for oil by a so-called basket of currencies.
This would include the yen, the yuan, the euro, gold and a future common currency in the Gulf region.
However, the report has been denied by a host of countries, including France, Kuwait, Qatar and Russia.
"Despite the denials, there are probably all sorts of discussions going on about how to reduce dependence on the dollar and diversify reserves," said Hufton.
"But they are hardly likely to be confirmed given that it would only serve to cut the value of the very reserves countries are seeking to diversify out of."
Elsewhere on Wednesday, investorsâ€™ eyes were turned to US mining giant Alcoa, whose earnings results were due out later in the day, kicking off the US corporate earnings season.
In London on Wednesday, the euro was changing hands at 1.4710 dollars against 1.4715 dollars late on Tuesday, at 129.96 yen (130.72), 0.9256 pounds (0.9246) and 1.5132 Swiss francs (1.5114).
The dollar stood at 88.23 yen (88.82) and 1.0272 Swiss francs (1.0269).
The pound was at 1.5915 dollars (1.5914).
On the London Bullion Market, the price of gold jumped to 1,046.64 dollars an ounce from 1,038.75 dollars an ounce late on Tuesday.