Gold price storms to record above 1,200 dollars

LONDON, December 1, 2009 (AFP) – The price of gold reached above 1,200 dollars an ounce for the first time on Tuesday as a weak US currency pushed up demand for the precious metal viewed as a safe-haven investment, analysts said.

Gold struck a record high 1,201.63 dollars an ounce on the London Bullion Market at 1639 GMT.

It later pulled back slightly to stand at 1,199.65 dollars.

Gold has struck historic peaks over recent days and weeks as the dollar drops against major rivals the euro and yen.

“As ever, another painful week for the US currency saw new highs for gold,” VTB Capital commodities analyst Andrey Kryuchenkov said on Tuesday.

In recent weeks, gold has smashed record after record also on the back of inflationary fears and increasing moves by central banks to diversify assets away from the greenback.

The yellow metal, whose two main drivers are jewellery and investment buyers, has also won favour in the uncertain economic climate and fears of a mounting Dubai debt crisis.

“Gold continues to benefit from an almost ‘perfect storm’ of weak currencies, minimal interest rates, fears about future inflation and fears about financial stability,” said Capital Spreads analyst Simon Denham.