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Gold highest in three months

May 22 2009 22:44

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New York - Gold prices continued their climb on Friday, closing at a three-month high as the dollar sank to fresh multimonth lows against other major currencies.

Gold tends to move inversely with the dollar because investors use it as a hedge against inflation, which can be ignited by a weak greenback.

The US currency has been under pressure in recent weeks as investors worry that the flood of money the government is pumping into the system to stimulate the economy will weaken the dollar's purchasing power.

That fear was exacerbated this week after Standard & Poor's warned it could cut its rating on UK debt because of the massive amounts the British government is borrowing to prop up its financial system and boost its economy. That set off fears that the US government's own AAA credit rating might also be in trouble.

Gold for June delivery added $7.70 to settle at $958.90 an ounce on the New York Mercantile Exchange - the highest close since February 25. Prices gained 3% this week and are up 8.4% for the year.

Other metals also rose. July silver jumped 25 cents to $14.6950 an ounce, while July copper futures rose 4.65 cents to $2.0975 a pound.

- AP

 
 
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