Gold hits new 28-year peak as platinum nears record high

London: Gold hit a 28-year high yesterday as a weak dollar made the metal more attractive to investors, while platinum approached an all-time peak on heavy speculative buying.

Spot gold rallied to $746.30 an ounce, its highest level since January 1980, before easing to $744.90/$745.60, still higher from $742.40/$743.20 late in New York on Friday. The metal has hit new highs four times in less than two weeks. "Gold is feeling a bit heavy at the moment. I think we are likely to see a correction from here unless something else comes into the market to trigger another leg lower in the dollar," said Tom Kendall, metals strategist at Mitsubishi Corporation.


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"But overall, gold is still pretty bullish and I don't think we are likely to come back below $700 in the near term. The more headlines about gold appear in the mainstream media, the more overall sentiment keeps on going," he said.

The dollar edged up from earlier record lows against the euro, as investors awaited a batch of US data for confirmation that more rate cuts were on the cards. The Institute for Supply Management's manufacturing index is due later in the session.

A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand.

"With no signs of the dollar ending its slide against major currencies, bullishness is ample. But this does not exclude the market from a near-term pull back," said Pradeep Unni, analyst at Vision Commodity Services in Dubai.

In other bullion markets, August 2008 futures in Tokyo ended 28 yen per gram higher at 2,786 yen - its loftiest level since 1985. US futures also added gains, with December contract hitting a 28-year high at $753.60 an ounce.

Central bank reserves

High prices have lifted gold's share in the total reserves of central banks. Taiwan said its forex reserves, the world's fourth largest, included $10.1 billion in gold and helped boost the value of the island's assets.

In other news, the Bank of England said some of its gold reserves had surface cracks, a result of how they were cast 50 years ago in New York, but it stressed that the purity of the bullion was not affected.

Anglo American said it planned to sell 61 million ordinary shares in AngloGold Ashanti in a major step to cut its stake in the gold miner.

Spot platinum hit an intraday high of $1,391 an ounce, within sight of last November's record high of $1,395, before dipping to $1,378/$1,382, versus New York's $1,385/$1,390.