Gold bars and US Dollar bills
Spot gold prices breached $1,500 (Dh5,510) for the first time and silver hit a 31-year high on Wednesday, supported by a weak dollar and
concerns over a sovereign debt crisis in the euro zone. Lofty oil prices, inflation concerns, worriesover the euro zone sovereign debt crisis as well as political tensions in places like the Middle East should keep gold strong for the time being, analysts said. "There are not a great deal of reasons to sell it at the moment, apart from concerns that there are a lot of longs in the market and there is a risk of sell-off at some point," said Darren Heathcote, head of trading at Investec Australia.
Spot gold rose to $1,500.16 an ounce before easing slightly to $1,499.10 by 0513 GMT, up 0.4 per cent. US gold futures GCcv1 rose to a record of $1,500.90. The dollar index , a measure of the greenback against a basket of currencies, softened towards its 16-month low hit last week, boosting the appeal of gold in non-dollar denominated currencies. Technical analysis also points to a further rally in gold targeting $1,518, according to Reuters market analyst Wang Tao.
Some market watchers see gold consolidating at its current level as it waits for the next reason to push higher. "I don't see prices convincingly past that level in the next few days unless we see something very negative, probably related to the euro zone sovereign debt. But we do see gold very well supported at the $1,490 level," said Natalie Robertson, commodities strategist at ANZ. Fears over a potential downgrade of the US credit rating eased after US Treasury Secretary Timothy Geithner tried to reassure investors the country's two parties were making progress on reducing the deficit, she added.
Silver continued to charge ahead, rising to a 31-year high for the fifth consecutive session, as investors continued to favour gold's less expensive cousin. Spot silver rose to $44.34, a level unseen since 1980, before easing slightly to $44.25, up 0.8 per cent. Analysts and traders expected silver to continue to shine, as investors favour the metal, which benefits both from safe haven demand and growing industrial consumption.