Gold reaches $1,010 on dollar’s weakening

image Early on Wednesday, bullion surges a high of $1,010 as the dollar index hit a one-year low, encouraging the metal’s demand as an alternative investment.

Spot gold was trading at $1,007.55 an ounce today, compared to the US notional close of $1,005.90. Friday, bullion rose as high as $1,011.55 hitting its highest since March 2008 level.

Growing optimism about the economy has prompted investors to sell the dollar and snap up riskier assets such as stocks and commodities, helping to lift gold above $1,000 an ounce last week. Ben Bernanke said on Tuesday that the recession was likely over, while data supported hopes that a recovery from the worst downturn in decades was advancing.

The dollar index, estimating the dollar’s value against a basket of six major currencies, fell to a one-year low of 76.406 .DXY before paring losses to 76.475, that is down 0.1% on the day.

Many analysts see gold prices rising further. Thus, Martin Murenbeeld, believes gold prices could rise above $1,110 in 2010 as central banks diversify their reserves into gold due to the faltering dollar.

The high gold prices have also prompted more selling of gold scrap.

Buying based on technical charts has also contributed to gold’s bull run, but in contrast high prices have caused individual investors to think twice about buying physical gold, experts consider.

Money inflows into gold-backed securities remained slow.

US gold futures for December delivery rose by 0.3% climbing to $1,009.4 an ounce. Futures hit $1,013.70 on Friday, the highest level since February.

The SPDR Gold Trust’s holdings stood at 1,078.851 tonnes as of September, 15, unchanged from the previous business day.


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