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Gold hits new record; crude oil above US$71

India Infoline News Service | Mumbai |

The US dollar lost ground against the euro, sterling and the Japanese yen today

There is no stopping the gold bulls. Futures in the precious metal touched a fresh record intraday high of US$1,047.40 an ounce in electronic trading on Wednesday. Spot gold advanced to US$1,044.04 an ounce.

Gold futures had finished at a new record closing level on Tuesday, after hitting a record intraday high of US$1,045 an ounce. Gold has risen 18% this year.

The latest spurt in gold came even as the US dollar slumped on a report suggesting the end of dollar-based oil trading and as Australia hiked interest rates on signs of strength in the economy. The reports on Gulf nations shifting to non-dollar trade were later denied.

The dollar lost ground against the euro, sterling and the Japanese yen today. The dollar index, which compares the greenback with a basket of six major currencies, dropped to 76.42 today from 78.01 a month ago, prompting investors to buy commodities as an inflation hedge.

Meanwhile, Barclays Capital said that investors should hold onto long positions in gold as bullion has significant upside potential to reach as high as US$1,500 an ounce, citing trading patterns.

"Having rallied off the charts, we are left to resort to projections and extrapolated trendlines to forecast where the move might stop," Jordan Kotick, global head of technical analysis at Barclays Capital, wrote in a note today.

Oil prices advanced for a third day today as investors bought commodities to protect their wealth on speculation that the dollar will extend its decline and inflation accelerate. Asian stocks gained and the dollar was near the lowest level in almost two weeks against the euro.

The dollar is coming under pressure on speculation that the Federal Reserve will trail other central banks in raising interest rates.

Oil rose for a third day in New York after an industry report showed a decline in fuel and crude stockpiles in the US, the biggest energy-consuming nation.

Crude oil climbed above US$71 per barrel after the American Petroleum Institute said that distillate fuel inventories fell 2.91 million barrels last week while crude supplies dropped by 254,000 barrels. The Energy Information Administration will report government supply figures later today.

Crude oil for November delivery rose as much as 88 cents, or 1.2%, to US$71.76 a barrel in electronic trading on the New York Mercantile Exchange. It was at US$71.40 at 2:55 p.m. Singapore time.

Yesterday, the contract gained 47 cents to settle at US$70.88. Crude oil futures have soared 60% in New York this year.


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