Gold posts biggest annual rise in three decades
Settles $15 U.S. away from the metal's all-time high
http://www.thestar.com/Business/article/290135
Jan 01, 2008 04:30 AM
Gold has posted its highest yearly gain since 1979, with spot bullion closing at $834.90 (U.S.) as 2007 came to a close yesterday on the New York Mercantile Exchange.
The price fell $4.70 from Friday but settled at just $15 away from the precious metal's all-time high. Gold has jumped more than 30 per cent this year as a slide in the United States dollar, record high oil prices, credit-market turmoil, falling U.S. interest rates and geopolitical tension helped to increase bullion's safe-haven appeal.
"For gold, this marks the sixth consecutive year of positive returns and, consequently, represents the longest gold-price rally in history," Deutsche Bank said.
In recent days, the metal gained on speculative buying driven by greenback weakness and tensions in Pakistan after the assassination of opposition leader Benazir Bhutto.
"Certainly, we are looking for a test of $850 very early in 2008," said James Moore, precious-metals analyst at TheBullionDesk.com. "All the supportive factors are still there."
Gold was fixed at a record high of $850 in January 1980 on high inflation linked to strong oil, Soviet intervention in Afghanistan and the effects of the Iranian revolution.
After adjusting for inflation to 2006, that price was equal to $2,079, according to industry estimates. So, bullion does have a long way to go in terms of retouching the highest buying power ever.
In straight dollar terms, however, gold has been becoming a lot cheaper for holders of other currencies to buy. As part of the pattern, the U.S. dollar plunged to less than parity with the loonie in 2007 for the first time in the modern era.
A weaker U.S. dollar also often lifts demand for bullion, putting more upward pressure on the price.
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