Gold hits record above $1,340 as dollar slides


Frank Tang and Jan Harvey
Reuters
October 5, 2010

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NEW YORK/LONDON (Reuters) – Gold jumped nearly 2 percent on Tuesday, its biggest one-day rise since May, resuming its march to record highs as the dollar tumbled and currency market volatility ignited safe-haven buying.

Silver surged 3 percent to a 30-year high and platinum group metals also rallied with the entire commodities complex, after the Bank of Japan said it would to pump more funds into the country’s struggling economy and keep interest rates virtually at zero.

Moves by countries around the world toward easier money indicate “not only the amount of liquidity that has been put into the system will remain, but there is a high likelihood of significant level of liquidity being added into the system,” said Frank McGhee, head precious metals trader at Integrated Brokerage Services.

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McGhee said expected monetary easing in the United States will result in major devaluation on the dollar, which benefits gold.

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