Hong Kong gold closes at record high

Chandi Dharmaratne

HONG KONG, June 21, 2010 (AFP) – Gold closed at a record high above 1,264 dollars an ounce in Hong Kong on Monday as the greenback weakened against Asian currencies after China’s announcement of a more flexible yuan. The precious metal ended at 1,264.50 US dollars an ounce.

The main catalyst for the rally was China’s decision at the weekend to allow greater flexibility in the yuan’s exchange rate, which sent industrial metals higher.

A weaker greenback makes gold cheaper for traders using foreign currencies.

The yuan rose to a five-year high of 6.8089 to the dollar Monday. With China a net gold importer the gradual strengthening expected in the yuan is positive for gold demand, Dow Jones Newswires said.