Continuing economic uncertainly and a weakening dollar have contributed to a sustained upward march in gold prices, which reached a new high on Wednesday.
Gold futures for December delivery briefly hovered at a high of $1,119.10 an ounce on the New York Mercantile Exchange in morning trading, before falling back and settling at $1,114.60, which represented an increase of $12.10 from Tuesday’s closing, according to the Associated Press.
The development comes as the Federal Reserve announced it would keep interest rates low to aid the sluggish economic recovery, sending the dollar to a 15-month low.
This, coupled with government economic stimulus measures, has rekindled fears of inflation and prompted investors to seek safety in commodities such as gold.
"If [the DXY U.S. Dollar Index Future] fails or extends lower we could easily see gold push on to new highs above the $1,150 level," said James Moore, analyst at TheBullionDesk.com, quoted by TheStreet.com. His sentiment was echoed by experts such as Jim Steel, senior vice president and metals analyst at HSBC, who spoke to the Wall Street Journal.
Meanwhile, the WSJ reported that gold got an additional boost last week on news that India’s central bank bought 200 metric tons of the 403.3 tons the International Monetary Fund put on the market.
The AP says gold prices are up 26 percent from last fall.