Gold soars further as investors hedge against dollar, inflation

       Gold advanced to a record for a second consecutive day as investors bought precious metals to hedge against a weaker dollar and faster inflation. Silver reached a 14-month high and platinum the most in 13 months.
       The dollar index, a six-currency gauge of the dollar's value, slumped to the lowest level since August of last year on bets the Federal Reseve will trail other central banks in increasing borrowing costs.
       Gold reached US$1,070.80 (Bt35,812) in London, while futures rose to $1,072 in New York as crude oil, used by some investors as an inflation guide, reached a one-year high. Taiwan's central bank said it might consider placing more of its reserves in gold.
       "Most of the gold rally has been attributable to a weaker dollar," said Tobias Merath, head of commodity research at Credit Suisse Group in Zurich. "We are in uncharted territory. You still have robust investment flows and we think gold can easily reach $1,100 an ounce" this year, he said.
       Immediate-delivery bullion added $1.15, or 0.1 per cent, to $1,065.45 an ounce by mid-morning local time. Spot prices have advanced 21 per cent this year and are heading for a ninth annual gain. December futures were 0.1 per cent higher at $1,066.40 an ounce on the New York Mercantile Exchange's Comex division.
       "What's happening it that they are selling out of dollars and buying equities around the world, currencies and of course gold," said Mark Pervan, head of commodity research at ANZ Banking Group. "The dollar is being held hostage to increased rish appetite."
       Taiwan may consider buying more gold, its central bank governor Perng Fai-nan told reporters in Taipei yesterday. The news helped boost bullion prices, Credit Suisse said in a note.
       The dollar index slipped 0.5 per cent yesterday, taking its loss this year to 7 per cent. Oil futures gained as much as 1.4 per cent to $75.15 a barrel in New York and have soared 68 per cent this year.
       "The all-night printing runs at the Treasury are chipping away at the dollar's ability to hold value compared to other currencies and commodities," Mike Sander, in Seattle, said on Tuesday. "With dollar weakness, inflation fears, a huge budget deficit, energy prices creeping up, metals such as gold, silver and copper will be pushed up in price."
       US President Barack Obama has increased US marketable debt to a record as he borrows to reignite growth in the world's biggest economy. That's boosted speculation increased money supply will debase the currency and spur inflation.
       The Federal Reserve has cut its main interest rate almost to zero and backed asset purchases and credit programmes to combat the recession. Chairman Ben Bernanke is leading plans to buy mortgage-backed securities, federal agency debt and treasuries.
       "A weakening US dollar and easy liquidity conditions will mainly favour precious metals, and we expect prices of gold, silver and platinum all to register further gains over the next year," Morgan Stanley analysts said in a report yesterday.
       Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a fourth day at 1,109.31 metric tonnes on Tuesday, according to the company's website. Assets in ETF Securities' exchange-traded products added 0.6 per cent to a record 8.493 million ounces on Tuesday, its website showed.
       Silver jumped as much as 1.7 per cent to $18.085 an ounce, the highest since July of last year, and was last at $17.97. Platinum rose to a 13-month high of $1,365.50 an ounce before trading at $1,362 and palladium added 0.6 per cent to $330.60 an ounce.