GOLD hit a one-month high yesterday as the dollar came under pressure from easing fears over potential US rate hikes, and as talk of a bailout for debt-ridden Greece underpinned the euro.
Investors have in recent weeks poured money into gold as a hedge against currency volatility, while the metal's steady rebound since falling below R8579 an ounce has also ignited technical buying.
Spot gold hit an intraday high of R8757,38 an ounce and was quoted at R8697,70 by mid-afternoon, up from R8629,84 at New York's notional close on Friday.
The dollar weakened yesterday as investors reassessed the chances of an earlier-than-expected interest rate hike by the Federal Reserve.
Currency markets took the Fed's surprise decision to raise its discount rate last week as a signal the US central bank was coming closer to raising its benchmark rate. But a benign US inflation reading on Friday caused markets to reassess that view.
Also limiting the dollar's gains versus the euro were reports that Germany had prepared plans for aid worth between R210billion and R263billion for debt-laden Greece. Falls in the dollar tend to benefit gold as the metal is seen as an alternative asset to the US currency.
More recently, however, gold has been bought as a hedge against volatility in general. Investors await Fed chairman Ben Bernanke's twice-yearly testimony to Congress and the Senate tomorrow and Thursday for further clues on rate policy. - Reuters