MercoPress. South Atlantic News Agency

Gold soars to new all-time record on fears of financial instability

History recorded Lenin saying that “gold would be used to plate the inner surfaces of public urinals”

The price of gold has hit a new all-time high of 1,043.77 US dollars an ounce after a decline in the greenback boosted the attractiveness of metals to investors. Copper prices also rose above 6,000 USD a ton, as the weaker dollar made metals cheaper for non-US investors.

The dollar fell after a newspaper report - later denied - said that Gulf nations wished to replace the greenback as the main oil currency. The rise in metal prices lifted shares in mining firms.

Mining stocks were among the biggest risers on the UK's main FTSE 100 share index, with Fresnillo adding 10% and both Kazakhmys and Vedanta up 9%.

Analysts said concern about the possibility of higher inflation in the US as its economy recovers was another factor in lowering the price of the dollar, further boosting the appeal of gold.

The last time the spot price of gold hit a new high was in March 2008, when it reached 1,032.80 USD an ounce. Analysts said the price of gold could rise still further towards the end of the year if the dollar remained weak.

The price of gold is also typically strong in the October to December period because of the higher demand for jewellery in the run-up to Christmas and the Indian festival of Diwali.

Demand for gold is currently strong in India, and Indian communities around the world ahead of the festival of lights, which this year falls on 17 October. This is because gold jewellery is typically given as presents.

Adrian Ash, head of research at UK gold brokerage BullionVault.com, said a growing number of private investors were buying the precious metal as a haven against both instability in the financial markets and fears over inflation.

“The bottom line is that after Northern Rock and the wider crisis in the financial markets, more and more people really started to move into gold,” he said.

“Gold is a physical investment, they own it outright, so they are not exposed to any bank's financial survival.

”Now a lot of investors are buying gold because they are concerned about the impact of higher inflation - they are fearful about how much governments are borrowing, and how much money central banks such as the Bank of England are putting into the economy.”

Mr Ash predicts that gold prices will continue to rise, but does caution that it can be a volatile commodity.

Other precious metals also saw their prices rise on Tuesday, with silver up 3% to 17.11 USD an ounce, and platinum adding 0.9% to 1,305 USD an ounce. The price of copper was up 2.4% to 6,060 USD a ton. (BBC)