Dollar holds against euro, sends gold to new record

NEW YORK: The dollar recovered slightly against the euro late Friday but not before it hit a 16-month low and sent gold soaring to a new record just shy of $1,570 an ounce.

The euro traded to $1.4878 at midday in New York before settling at $1.4808 around 2100 GMT, compared to $1.4822 late Thursday.

The dollar lost ground to the Japanese currency, trading to 81.17 yen from 81.48 yen.

The greenback's weakness was having a deep impact on a range of commodities, said Adam Sieminski of Deutsche Bank.

"The dollar is very weak and that relationship between weaker dollar and stronger commodity prices, especially oil, is a powerful one," he said.

"From the financial side, the two things that are very positive for oil are a weak dollar and a strong stock market and over the last few weeks we are getting both."

Gold rocketed to almost $1,570 an ounce, setting a new dollar-price record as its unabated rise was propelled by extremely low interest rates and the dollar's weakness.

With London trading shut down for the royal wedding, in afternoon New York trade gold struck $1,569.32 an ounce before sliding back to around $1,556. Just nine days earlier it passed the once-unimagined level of $1,500.

"Gold is again profiting from the soft US dollar and has (struck) an all-time high for the third consecutive day," said analysts at Commerzbank.

"The fact that the rise of the gold price is largely driven by the US dollar currently is also reflected in the movements of the price in euros, ... trading nearly unchanged," they added.

Silver, meanwhile, pushed to $49.17 an ounce, also a record, climbing from the $10 level in just 30 months.

"The number one question in the foreign exchange market is how much longer and further can the dollar slide," said Kathy Lien of GFT.

"With the latest round of dollar weakness taking the euro to a high of 1.4880, the greenback (has) lost nearly 11 percent of its value since the beginning of the year."

The pound gained to $1.6704 from $1.6634 Thursday. The dollar bought 0.8648 Swiss francs (0.8734).