Gold hits 28-yr high as dollar touches record lows

By Atul Prakash

LONDON (Reuters) - Gold hit a 28-year high on Friday as the dollar's continued slide to record lows versus the euro raised the metal's appeal to speculative investors.
Other precious metals also advanced, with silver rising to its highest in more than three months, platinum hitting its highest since early May and palladium touching a five-week peak.
Spot gold rose as high as $739 an ounce, its highest since January 1980, also helped by technical buying and short-covering. It was quoted at $735.60/736.40 by 1010 GMT, up from $734.20/735.00 in New York late on Thursday.
"There has been substantial safe-haven buying. The dollar has weakened to record lows and we have revised our forecast up for oil as well. On the top of that environment, there is anticipation of slower U.S. growth momentum and Fed rate easing," said Suki Copper, analyst at Barclays Capital.
"These factors are very supportive for gold and we see prices traveling even higher. The positive investor sentiment is very evident in the ETF positions and also in the Comex futures positions." she said.
The euro hit an all-time high versus a broadly weak dollar as investors dumped the greenback after the Federal Reserve's aggressive rate cut this week.
Comments from Fed Chairman Ben Bernanke on Thursday that global financial losses stemming from disarray in the U.S. subprime mortgage market "far exceeded even the most pessimistic estimates" put more pressure on the dollar.
A weaker U.S. currency makes dollar-denominated metals cheaper for investors in other currencies, while gold is also seen as a hedge against oil-led inflation.
Oil prices fell towards $81 a barrel, as sellers emerged after a record above $84 the previous day when a tropical depression forced the shutdown of Gulf of Mexico output.
Gold spiked to a life-time high of $850 in January 1980 as high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution prompted investors to buy the precious metal heavily. continued...