Heather Stewart
January 11, 2011

Gold prices hit a record high of $1,040 an ounce today , as renewed speculation about the declining power of the dollar as the world’s reserve currency sent investors stampeding into commodities.

Reports that secret talks had been held between China and Middle Eastern states about changing the pricing of oil from dollars to a basket of currencies and gold sent the greenback into a renewed slide on foreign exchange markets, despite denials from the governments involved. By late afternoon the euro was up by 0.7% against the dollar at $1.47.

Share prices also rallied as investors’ hopes that global recovery was gaining ground were boosted by news that the Australian central bank had become the first to increase interest rates since the world recession began.

The FTSE 100 closed up 113 points, at 5138, with mining, oil and gas companies contributing much of the increase. The Dow Jones industrial average of leading shares was up 157 points by lunchtime in New York.

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