THE PRICE of gold soared to a record high above $1,060 (£663) an ounce this week, spurred on by a weakening dollar and doubts about the greenback’s future as the world’s leading reserve currency.
The dollar’s future as the world’s top currency was thrown into doubt on Tuesday (October 6) as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
Arab states have launched moves with China, Russia, Japan and France to stop using the dollar for oil trades, British daily The Independent reported on Tuesday, but the story was denied by a number of nations.
The UN meanwhile on Tuesday called for a new global reserve currency to end dollar supremacy, which has allowed the US the “privilege” of building a huge trade deficit.
The Independent’s Middle East correspondent Robert Fisk wrote in his paper: “In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil.”
They would instead switch "to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar,” added Fisk.
Gold, viewed as a safe-haven investment, has won back favour in recent months as the global economy struggles out of its worst slump in decades.
The run-up in gold has been largely driven by weakness in the dollar which makes dollar-priced commodities cheaper for holders of stronger currencies, boosting demand.
Gold traditionally wins support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.
