Gold breaks 28-year record to hit $859 per ounce

Unrest in Pakistan, a faltering dollar and surging oil futures sent the price of gold soaring to a record high on Wednesday [2 Jan 2008], beating its previous highest level set 28 years ago. The precious metal rose to 859 dollars, smashing its peak of 850 dollars an ounce reached on January 21, 1980. It later slipped back to 855.28 dollars on profit-taking.

"Although conditions remain on the thin side ... (gold's) move suggests that funds may have made additional moves into bullion with Pakistan remaining on edge and investors nervous about financial markets," said Kitco Bullion Dealers' analyst Jon Nadler. "A sharp rise in crude oil ... and a softer US dollar" contributed to gold's rally, he added. Political unrest in Pakistan has led to interest in gold because the precious metal is regarded as a haven in troubled times.

A falling US unit encourages demand for dollar-priced commodities such as gold because it makes them cheaper for buyers using stronger currencies. Higher oil prices also encourage the buying of gold. Gold is seen as a defence against inflation, which is being driven in many countries by higher oil prices.

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