Gold Hits New Record High as Dollar Slips

Gold rose to a record high at $1,063.60 an ounce on Tuesday as the dollar slipped against the euro, increasing the metal's appeal as an alternative asset.

Firmer oil prices and an improvement in physical demand for gold [US@GC.1  1068.4    11.7001  (+1.11%)   ] after a sluggish year for jewellery buying are also lifting gold prices, analysts said.

Spot gold was bid at $1,062.70 an ounce at 0834 GMT against $1,055.25 late in New York on Monday.

Options-related activity also played a role in the euro's moves on Tuesday, with the currency's recent rebound to test September's high of $1.4842 fizzling out ahead of reported large options barriers and expiries at $1.4850.

Early trading in Europe was quiet and confined to narrow ranges, something which may change with the German ZEW investor sentiment survey at 0900 GMT and the latest batch of U.S. third quarter earnings when U.S. markets open.

"Risk perception remains an important topic in the absence of a cyclical trend out of the United States.

AP

But I wouldn't expect any serious impact on the risk perception picture when liquidity remains very ample, so in this environment commodity currencies should continue to outperform," said Michael Klawitter, currency strategist at Commerzbank in Frankfurt.

Although U.S. central bank officials continue to warn of eventual policy tightening, this was only to put a lid on inflation expectations.

"They have to express a certain degree of hawkishness. But between that and actual action, there is a fairly large gap. Consequently, the dollar isn't getting any real meaningful support," Klawitter said.

At 0750 GMT the dollar index, a measure of the greenback's value against six currencies, was up 0.15 percent on the day at 76.25, still within sight of its 14-month low of 75.767 struck last week.

Fed Speakers

The dollar was up a quarter of a percent against the yen [$$USDJPY  89.54    -0.25  (-0.28%)   ]and was flat against the euro at $1.4765 per euro [EUR=  1.4856    0.0078  (+0.53%)   ].

• The Dollar Meeting Nobody Talks About

"We remain bullish on the yen crosses as we expect bond markets to remain under near-term selling pressure as equity markets move sharply higher," BNP Paribas said on Tuesday.

"Oil price and other commodity prices are rising as investors line up for everything which looks like an asset."

The New Zealand dollar [NZD=  0.7408    0.005  (+0.68%)   ] was up almost half a percent while the Australian dollar, which earlier hit a 14-month high of $0.9094 [AUD=  0.9113    0.0041  (+0.45%)   ] eased back as dealers booked profits from the recent rise.

Sterling remained under selling pressure, with the euro hitting a fresh 6-month high of 93.89 pence as concerns about Britain's weak fiscal position outweighed positive data.

Although overall market activity was subdued, growth-linked and higher-yielding currencies such as the Aussie and the kiwi were supported ahead of more U.S. earnings this week.

On Tuesday, Federal Reserve Bank of New York President William Dudley speaks at 1715 GMT while Fed Vice President Donald Kohn speaks on the economic outlook at 1745 GMT.

- Via CNBC