Gold price hits record high on 'plan' to ditch dollar

The price of gold struck an all-time high at 1 , 038.65 dollars an
ounce here on Tuesday as the dollar fell on a reported plan by Gulf
states to stop using the greenback for oil trading. Gold reached the
level in late afternoon trade on the London Bullion Market, beating
the previous record high of 1 , 032.70 dollars an ounce struck in
March, 2008. "Gold prices hit an all-time high as the dollar
weakens," said Barclays Capital precious metals analyst Suki Cooper.
"The dollar weakness appears to be related to ... (reported) secret
talks about oil being priced in a basket of currencies including gold
rather than the dollar, which has added to concerns about the future
role of the dollar in international financial markets." The dollar's
future as the world's top currency was thrown into doubt on Tuesday as
a report said Arab states had launched secret moves with China and
Russia to stop using the greenback for oil trading. Arab states have
launched steps with China, Russia, Japan and France to stop using the
dollar for oil trades, British daily The Independent reported on
Tuesday, but the report was denied by Kuwait and Qatar and
reportedly by other nations. The United Nations meanwhile on Tuesday
called for a new global reserve currency to end dollar supremacy,
which has allowed the United States the "privilege" of building a
huge trade deficit. The Independent's Middle East correspondent
Robert Fisk wrote in his paper: "In the most profound financial
change in recent Middle East history, Gulf Arabs are planning --
along with China, Russia, Japan and France -- to end dollar dealings
for oil." They would instead switch "to a basket of currencies
including the Japanese yen and Chinese yuan, the euro, gold and a
new, unified currency planned for nations in the Gulf Co-operation
Council (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar,"
added Fisk. Gold, viewed as a safe-haven investment, has won back
favour in recent months as the global economy struggles out of its
worst slump in decades. The run-up in gold has been largely driven by
weakness in the dollar, which makes dollar- priced commodities
cheaper for holders of stronger currencies, boosting demand.