Gold eases from record but sentiment stays bullish

7 October 2009  Yahoo News

Gold eased from record highs on Wednesday as investors took profits, but sentiment remained bullish and a fresh record was within sight as the dollar's weakness and inflation concerns reinforced bullion's appeal as a hedge.

Both spot gold and U.S. gold futures have benefited from factors including technical buying, growing talk of countries diversifying foreign reserves or settlement currencies away from the dollar, and inflation concerns fueled by current massive fiscal stimulus measures and aggressive monetary easing.

"The driving force for gold's rally is the declining confidence in the dollar, which helped elevate gold's stature, along with the explosive growth in gold-backed exchange-traded funds which broadened the investor base for bullion," said Shuji Sugata, a manager at Mitsubishi Corp Futures & Securities.

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