Gold price hits record high of US$1,111.20 as dollar wanes

The dollar slumped as much as 1.1 percent against a basket of six major currencies after the Group of 20 governments agreed to keep stimulus measures and remained silent on the greenback's decline this year. Gold jumped 5.7 percent in the past month in London as the Dollar Index slipped 1.9 percent and as news last week of an Indian government bullion purchase raised speculation that other countries would follow suit.

“The dollar will continue to have a very big impact on the metals and gold,” Afshin Nabavi, a senior vice president at bullion refiner MKS Finance SA in Geneva, said Monday by phone. “Gold has got quite a way to go.”

Gold for immediate delivery rose as much as US$14.40, or 1.3 percent, to US$1,109.50 an ounce in London and traded at US$1,108.88 by 11:06 a.m. local time. December gold futures climbed as much as 1.3 percent to US$1,109.90 an ounce on the New York Mercantile Exchange's Comex division and were last at US$1,109.20.

The metal climbed to US$1,108.50 in the morning “fixing” in London, an all-time high, from US$1,096.75 at the afternoon fixing on Nov. 6. Some mining companies use fixings to sell production. Spot prices advanced 4.8 percent last week, the biggest gain since April.

“Scrap sales are pretty minimal,” Nabavi said. “You'd expect at these levels there would be tons and tons, but it's not the case.”

The Dollar Index, a measure of the greenback against the euro and five other currencies, fell to a two-week low Monday. The index tumbled 7.8 percent this year, fueling a 26 percent rally in spot gold prices. It slipped last week as Federal Reserve officials left interest rates near zero.

“The upside price benefits of rising expectations that central banks are shifting from net sellers to net buyers were reinforced by another dovish FOMC meeting, a rise in U.S. unemployment and the continuing commitment to economic stimulus by the G-20 finance ministers,” Morgan Stanley analysts led by Hussein Allidina said in a note Monday.

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