Gold surges above 980 usd mark briefly on weak dollar, high oil prices

XFN-ASIA
Tuesday, July 15, 2008

Gold remained strong in late Asian trade and surged above 980 usd briefly as the US dollar continued to decline, approaching a record low against the euro.

The weakening dollar boosted the appeal of the precious metal as an alternative investment and helped push oil prices higher, which in turn bolstered demand for gold as a hedge against inflation.

At 5.05 pm, gold futures for August delivery traded at 979.70 usd per ounce, off a high of 982.0 and a low of 970.50, against a close of 973.70 usd on the New York Mercantile Exchange yesterday.

Trading levels breached the four-month high of 969.10 usd recorded on March 19.

In the Hong Kong spot bullion market, Loco London 100 was quoted at 978.5/979.5 usd per ounce at 4.07 pm local time, against 971.30/971.30 in early afternoon and 965.0/972.60 late yesterday.

"The weakening dollar is now the main driver of soaring gold prices," said Wallace Ng, chief trader for Asia-Pacific in Fortis Bank Hong Kong's commodities derivatives department.

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