Gold struck a record price above $1,226 on Thursday as the US currency remained under pressure. Gold hit $1,226.56 an ounce approaching 0400 GMT. Gold went on to trade at $1,218.20 at 0820 GMT. Gold for current delivery closed at $1217.40 per troy ounce Thursday on the New York Mercantile Exchange, up from $1,212.00 late Wednesday. The precious metal's price, which on Tuesday rose above $1,200 for the first time, has been smashing record highs in recent weeks on fears of inflation and moves by central banks to diversify assets away from the greenback. A falling US currency makes dollar-denominated gold cheaper for buyers holding stronger units, pushing up demand for the metal and eventually its price. In Tokyo, gold hit record highs over $1,225 an ounce on Thursday as the precious metal continued to attract investors looking for an alternative to the dollar. Gold has risen by more than 7 percent since touching a low of $1,136.80 last Friday on fears of a possible default on debt in Dubai, which spurred investors to sell the metal to raise cash to cover losses. Analysts say worries about Dubai's loan payment problems still linger, although they with the dollar's persistent weakness coming to the fore. Shuji Sugata, a manager at Mitsubishi Corp Futures, said gold continued to be lifted higher because investors believed the greenback would stay weak. “The persistent view that the dollar will remain weak stems from moves to review dollar-based assets and the belief that interest rates will be stuck at low levels, and these are factors that remain unchanged,” he said. The metal reached record highs in euro and sterling terms on Thursday, according to Reuters data, indicating independent gold strength. Gold has risen 25 percent in the last three months. Gold denominated in yen, Swiss francs, euros, pounds and Australian dollars is seeing returns of between 15 and 22 percent over the same period. “Gold is being viewed as one of the primary alternatives to holding paper currency and the gold price has become a key barometer of investor confidence in government policies,” said Nigel Phelan, director of ETF Securities in Australia and New Zealand. Others said gold's link with currency markets was waning, however. “Everyone knows gold's running hot and more investors keep jumping in,” said Mat Kaleel, portfolio manager for commodities investment fund H3 Global Advisors in Sydney. “We could easily see it go up another $100,” he said. “Gold now appears to have its own momentum separate from the currencies.” Investors were also taking heart from moves by central banks to buy gold to diversify reserves.
