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Gold Hits 28-Year High

LONDON  —  Gold hit a 28-year high on Friday as the dollar's continued
slide to record lows versus the euro raised the metal's appeal to
speculative investors.

Other precious metals also advanced, with silver rising to its highest in
more than three months, platinum hitting its highest since early May and
palladium touching a five-week peak.

Spot gold rose as high as $739 an ounce, its highest since January 1980,
also helped by technical buying and short-covering. It was quoted at
$735.60/736.40 early Friday morning, up from $734.20/735.00 in New York
late Thursday.

"There has been substantial safe-haven buying. The dollar has weakened
to record lows and we have revised our forecast up for oil as well. On the
top of that environment, there is anticipation of slower U.S. growth
momentum and Fed rate easing," said Suki Copper, analyst at Barclays

"These factors are very supportive for gold and we see prices traveling
even higher. The positive investor sentiment is very evident in the ETF
positions and also in the Comex futures positions." she said.

The euro hit an all-time high versus a broadly weak dollar as investors
dumped the greenback after the Federal Reserve's aggressive rate cut this

Comments from Fed Chairman Ben Bernanke on Thursday that global
financial losses stemming from disarray in the U.S. subprime mortgage
market "far exceeded even the most pessimistic estimates" put more
pressure on the dollar.

A weaker U.S. currency makes dollar-denominated metals cheaper for
investors in other currencies, while gold is also seen as a hedge against
oil-led inflation.

Oil prices fell towards $81 a barrel, as sellers emerged after a record above
$84 the previous day when a tropical depression forced the shutdown of
Gulf of Mexico output.

Gold spiked to a life-time high of $850 in January 1980 as high inflation
linked to strong oil prices, Soviet intervention in Afghanistan and the
impact of the Iranian revolution prompted investors to buy the precious
metal heavily.


"If one is concerned about inflation arising as a result of excess credit,
then gold is a logical investment because there is no credit risk attached to
gold," Stephen Cohen, managing director at hedge fund firm Troika
Dialog, said.

"There are a number of things moving in favor of gold, but certainly if
people thought that central banks were taking a risk with inflation that
would be good for gold," he said.

Growth in bullion exchange-traded funds continued as investors
diversified their portfolios.

"At this point, we are seeing quite strong investor interest in gold. If the U.
S. dollar continues to edge lower against other currencies, then I think you
will see continued support for gold," said David Moore, a commodity
strategist at the Commonwealth Bank of Australia in Sydney.

In other bullion markets, the most active gold futures contract for August
2008 delivery on the Tokyo Commodity Exchange hit a high of 2,747 yen
per gram, its highest since August 1985, before ending 27 yen higher at
2,746 yen.

The most-active December U.S. gold contract was at $743.8 an ounce on
electronic trade, after hitting another 28-year high at $747.10 an ounce.

In other metals, platinum hit a high of $1,340 and was last at $1,336/1,340
an ounce, against $1,323.40/1,330.40 in New York. Silver rose to $13.57/13.
62 from $13.36/13.41, and palladium rose to $339/342 from $336.40/340.40.