Gold hits $1,000 as dollar slides

14/03/2008| IslamWeb

Gold prices have topped $1,000 an ounce for the first time after the dollar plunged to record lows against the yen and euro.

Stock markets in Asia, Europe and the United States slid on Thursday as fears of a looming recession continued to spread panic among investors.

After reaching the milestone of $1,000.45 dollars, gold stood at $994.05 per ounce on the London Bullion Market, up from $975.50 late on Wednesday.

Demand for gold is surging, in part, due to increased jewellery purchases in China and India, according to the World Gold Council.

Gold has risen by about 17 per cent so far this year, underscored also by supply problems in South Africa - the world's largest producer.

Stoppages by miners protesting unsafe working conditions and continued power cuts in South Africa have hampered supplies.

Traders said investors were putting their cash into commodities like gold, which enjoys safe-haven status, due to fears of a US-led economic slowdown, despite the US Federal Reserve pumping $200bn into the struggling economy.

US market jitters

Gold, which is priced in dollars, becomes cheaper for buyers using other currencies when the US unit falls in value.

The dollar slumped on Thursday against both the European single currency and the Japanese yen as fresh credit jitters swept across global markets, dealers said.

Manouchehr Takin, a senior analyst at the Centre for Global Energy Studies, said: "The economy works on confidence and the investors and the players have to have the confidence.

"Whether we like it or not, the general image in the world is that the United States, with a huge deficit and so much commitment of expenditure, is going to be in trouble financially."

While Takin expected world economic growth to continue to slow - due to a lack of confidence in the markets - he predicted a change in fortunes down the line.

"I think all these efforts by the central banks, both the federal reserve and in Europe, will change the perception," he said.

PHOTO CAPTION

Gold bars at a bank.

Al-Jazeera