Gold hits new high as investors take refuge

SINGAPORE - Gold climbed to an all-time high as investors stepped up purchases of the precious metal on speculation that the US dollar will extend a decline. Silver, platinum and palladium also advanced.

"Investors are taking shelter in gold," said Wallace Ng, chief dealer with Fortis Bank in Hong Kong. "I see gold rising to US$1300 ($1750) an ounce. It's not an unreasonable call at all if you look at how the dollar behaves."

The greenback fell for a second day against a basket of six currencies after a report showed Japan's economy grew more than economists expected in the third quarter. China's banking regulation head also warned that the "continuous depreciation" of the US currency had "seriously affected global asset prices". Shares in gold producers climbed.

Bullion for immediate delivery advanced as much as 0.7 per cent to US$1126.07 an ounce, surpassing the peak reached on November 12.

Japan's economy, the world's second-largest, expanded at an annual 4.8 per cent pace in the third quarter, the fastest since the first three months of 2007, the Cabinet Office said yesterday. That boosted demand for higher-yielding assets, prompting dollar sales, according to Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale.

Gold for December delivery climbed 1 per cent to a record US$1127.90 an ounce, and traded at US$1124.10 on the Comex division of the New York Mercantile Exchange.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said that low US interest rates and the dollar's fall posed risks to the global recovery, echoing comments from Donald Tsang, the chief executive of Hong Kong.

- BLOOMBERG