Dec 3, 2009
Hong Kong gold opens at new record high
Dec 3, 2009
HONG KONG, Dec 3, 2009 (AFP) - Hong Kong gold prices opened at a new record high Thursday 3 December, as the precious metal's surge continued with investors seeking safe-haven investments.
After opening at 1,223.50-1,224.50 US dollars an ounce, gold continued to climb in spot trade, at one point hitting 1,225.05 dollars.
Photo: AFP/File/Sebastian Derungs
It broke through the 1,200-dollar barrier for the first time on Tuesday 1 December.
Gold has smashed record after record over recent weeks on the back of inflationary fears and increasing moves by central banks to diversify assets away from the dollar, which has weakened against the European single currency.
A falling greenback makes dollar-denominated gold cheaper for buyers holding stronger currencies, pushing up demand for the metal and eventually its price.
The yellow metal, whose two main drivers are jewellery and investment buyers, has won favour in the uncertain economic climate which has been fuelled in recent days by Dubai's debt crisis.
Gold is traditionally viewed as a safe-haven investment.
"It is a store of value while investors have serious doubts about the global financial system," said CMC Markets analyst Michael Hewson.
"It is something that is not going to lose its value like a currency."
Gold prices have won support from central bank purchases of the metal.
The International Monetary Fund (IMF) last week announced it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars as part of a restructuring of its financial resources.
The record run for gold comes also after a recent newspaper report that India was mulling the purchase of more IMF gold reserves.
Commodities were the best asset class to invest in, as China and India's development drives demand growth and governments' money-printing pushes investors to seek exposure to alternative assets, said investment strategist Jim Rogers.
"If the world economy gets better, commodities are a great place to invest because of supply shortages," Rogers said in a conference call hosted by ETF Securities. He added that investment in new supply has been lacking for decades.
-- Dow Jones Newswires contributed to this story --
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