Spot gold broke and held above the key psychological 1,000 usd barrier and traded at a record 1,002.50 usd per ounce as the dollar tumbled to a new record low against the euro.
The dollar's freefall, which continued today with the greenback hitting another record low against the euro, has made gold cheaper for those trading in stronger currencies. Bullion is often seen as hedge against inflation and has also moved up in line with rocketing oil prices, which yesterday touched a record 111 usd.
Meanwhile, a bleak economic outlook, as the US flirts with recession and the world ready for a significant slowdown, has seen swathes of investment into gold as a safe haven asset, which keeps its value while equity markets crumble.
Also, players are betting on the likelihood of an aggressive US Federal Reserve interest rate cut on March 18. Such a move should weaken the dollar and support gold.
'The expectation of the coming cut will likely keep the gambling (hedge funds) on the boil and have them trying for another spike in gold,' said Kitco analyst Jon Nadler.
At 2.19 pm, spot gold was trading at 1,002.50 usd per ounce against 991.70 usd in late New York trade yesterday.
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