Gold Breaks $450 as Dollar Is Down
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Gold rose to more than $450 an ounce for the first time in 16 years in London after the dollar touched a record low against the euro for a third day, making bullion more appealing as an alternative investment to the American currency.
The dollar fell on speculation the European Central Bank won’t try to stem the euro’s advance against it and after four banks lowered their dollar forecasts. The euro rose 7.9% against the American currency in the past two months, helping boost dollar-denominated gold 11%.The dollar is also down 7.3% against the yen in the period, having reached the lowest in 4 1 /2 years today.
“The dollar is still the main driver for the movement up and the case for a weaker dollar is still there,” said a U.K.-based analyst at UBS AG in Geneva, Andreas Maag. A price of $500 an ounce by the end of next year “is not an extreme view,” he said.
Gold for immediate delivery in London rose as much as $3.30, or 0.7%, to $452.85, the highest since June 20, 1988. It was trading up $2.20, or 0.5%, at $451.75 as of 4:50 p.m.
Gold for December delivery climbed yesterday to $1.40, or 0.3%, to $449.30 on the New York Mercantile Exchange. The exchange was closed yesterday and is closed today for the Thanksgiving holiday. The thin volume in trading because of the holiday contributed to gold’s gains today, analysts said. After American funds come back into the market on Monday, there may be some selling, said James Moore, an analyst at the Web site TheBullionDesk.com.
