Gold hits fresh record

Gold rose to a record high for a fourth straight day and silver surged on Friday, as a weaker dollar, the prospect of a US government shutdown and inflation worries lifted precious metals in a broad commodities rally.

Gold notched its biggest weekly gain in four months, drawing support from renewed euro zone sovereign debt fears amid Portugal's financial crisis and inflation jitters as crude oil and corn hit new highs this week.

Bullion broke above key resistance on technical charts and could target above $1,500 an ounce. The metal has risen more than 10 per cent since late January when political unrest began to flare in the Middle East and North Africa.

'With the expected future inflation being higher in this low interest rate environment, investors are more inclined to have some contributions to commodities as an inflation hedge,' said Hakan Kaya, commodities portfolio manager at Neuberger Berman, which manages about $190 billion client assets.

Spot gold rose as high as $1,474.60 an ounce and was later up 1 per cent at $1,471.74 an ounce by 2:53 a.m. EDT. Bullion gained 2.5 per cent this week for a fourth straight weekly gain. US gold futures for June delivery settled up 1 per cent to $1,474.10.

Gold remained far below its all-time inflation-adjusted high, estimated at almost $2,500 an ounce set in 1980, an era of Cold War tension, oil shocks and hyperinflation.

US futures activity was sharply below average for a second day, but analysts said low volume was not detrimental to the metal's bull run.

Gains in other commodities also lifted precious metals, as crude oil futures soared to their highest since 2008 and the Reuters/Jefferies CRB .CRB index rose 1.2 per cent.

Silver rose 2.4 per cent to $40.50 an ounce, just off the session high of $40.73.

The gold-to-silver ratio — the number of silver ounces needed to buy an ounce of gold — fell to a 28-year low toward 35 on Friday.

'One would expect silver to outperform in this environment because it bears a higher risk than gold on a volatility basis,' Kaya said.

Source: New Age