LONDON: Gold prices jumped this week to within grasp of record highs above $1,000 per ounce on the back of a weak dollar and mounting economic optimism, while oil prices also edged higher. The euro hit 1.4767 dollars on Thursday, a level last seen on September 25, 2008, as investors opted for riskier assets in the search for better returns amid growing economic recovery hopes, dealers said. A weaker dollar makes dollar-priced commodities cheaper for holders of stronger currencies and tends to stimulate demand - and prices. Gold hit $1,024.28 an ounce on Thursday - the best level since March 2008 when it struck a record $1,032.70. Gold continued its rally above the closely-watched 1,000-dollar level ... and appears to be firmly on course to challenge its all time peak, said ODL Securities analysts in a research note. The move was supported by a fast declining US dollar, they added. Gold is being pushed up by two main trends - a fall in the value of the US currency as a result of rising economic confidence among some investors, and a desire among other investors to find a safe haven in still troubled waters. Gold is also seen as a safe bet for investors to guard against inflation, which is of growing concern following trillions of dollars in borrowing by governments and unorthodox measures including the printing of new money. Price momentum could slow in the short term for gold but we believe the macro environment could turn more favorable for gold as inflation concerns kick in and the dollar continues to weaken, Barclays Capital analysts said. Economic optimism was boosted last week when US Federal Reserve chairman Ben Bernanke suggested the US recession could finally be over, prompting traders to buy riskier currencies such as the euro instead of the safer dollar. A jump in US retail sales and steady commodity markets further helped reduce the appeal of the dollar. In the wake of gold, silver hit a 13-month high of $17.66 an ounce. By late Friday on the London Bullion Market, gold was higher at $1,012 an ounce from $1,008.25 a week earlier. Silver climbed to $17.11 an ounce from $16.89.
