Gold soars on fears of war

12 April 2012

GOLD soared to its highest level since 1999 as mounting tension between India and Pakistan added to its lustre as a safe haven in a crisis. It rose nearly $4 overnight to $319.60 an ounce, before settling back to $318, up $41 this year.

'It looks like war,' said one trader. 'The dollar has paled into insignificance. Gold has rushed to $319 and does not look like stopping.'

America's huge trade deficit is weakening the dollar's safe haven status. The Japanese, the world's biggest creditors, are worried about their banks' security and seeking other ways to store money.

Mining companies have cut their advance sales, and in some cases are now buying them back. Central banks are also selling less gold. 'Gold has been rising for 15 months,' says Martin Potts at Williams de Broe. 'This will not be the last week of the rally.'

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