CAIRO: With the weakening of the US dollar and the rise in oil prices, gold's month-long impressive performance presents a perfect opportunity for investors. The price of gold has set further record highs this week, reaching $923.40 an ounce, with dealers expecting the metal to crack the upside target of $950 in coming weeks. Analysts explained that a weakening US dollar, strong oil prices, and global inflationary fears have soared prices of the yellow metal, which is traditionally seen as a safe haven for investors. "Historically, investors [put their money] into gold in uncertain and volatile markets. This has been the trend for a long time, said Angus Blair, head of research at Beltone Financial. "The state of the world economy and weaknesses of the US dollar have increased demand on gold. Since the global credit crunch, which triggered the collapse of the US sub-prime market in 2007, gold prices have skyrocketed as investors looked for lower risk assets. Recent data shows that gold prices have now surged 50 percent over the past year. The metal was also boosted by the rise in oil prices, which also climbed to $91 a barrel. Naturally, gold prices in Egypt have gone through the ceiling. The price of one gram of 21 carat gold has now reached LE 139; 24 carat gold rose to LE 158.58; while 18 carat gold is now selling for LE 119.14. The rally was exacerbated by production halts at some of the world's biggest gold mines in South Africa, where power cuts closed mines and fuelled supply fears. "Gold prices have [further] increased after mines in South Africa were shut . [causing] a deficit of supply, Blair added. South Africa's power shortage became a national emergency on Friday, stopping not only gold but diamond and platinum production as well, and driving prices of precious metals to record highs. South Africa is second only to China in world gold production and is the globe's top producer of platinum. The country accounts for about 10 percent of global gold output and 80 percent of platinum production. Prices of platinum have also surged to $1,679.50 an ounce from $1,671.50-1,676.50 an ounce. It spiked to an all-time high of $1,697 an ounce on Friday. Worries that the dollar will remain weak as a result of further US interest rate cuts are another factor behind the current gold fever. Economists estimate that the US Federal Reserve will cut interest rates by as much as 50 basis points, following last week's hefty 75-basis-point cut. Experts deem the current record gold prices sustainable and predict that prices could easily go higher. According to Barrick Gold Corporation, the world's number one gold producer, the outlook for the yellow metal was more positive today than at any time in the past decade. "With increased demand and constrained supply, I'm more convinced that it [the price] is not only sustainable but may even reach the highs reached in the 1980s, Peter Munk, the company's chairman, said at the World Economic Forum. The yellow metal rush will remain in the future if further weaknesses in global economy as well as shortage of gold supply linger ahead. "Market volatility means that gold will probably remain around, Blair pointed out.
