Gold drops from record high

Gold dropped from record high on profit taking by investors and as the dollar gained momentum.

The shiny metal fell from all-time high of $1430.96 an ounce recorded yesterday as the rise encouraged investors to lock in gains.

The previous session, gold shed $22.60 or 1.59% to close at $1401.81, while gold price was setin London at $1420.00 per ounce declining from $1426.00 during the AM fixing.

The US dollar rebounded after falling earlier following Obama's approval to resume tax cuts and call for lower payroll taxes which is expected to give a boost on the short run yet it may raise debt on the long run.

The dollar index, which tracks the dollar movements against a basket of six currencies, soared to a high of 80.34 compared with the day's opening price at 79.98.

Accordingly, dollar-dominated commodities pared their advance where oil slipped to a low of $87.62 a barrel from yesterday's high of $90.72, while spot gold plummeted to a low of $1388.00 an ounce after it recorded a high of $1404.35.

With regard the euro, it lowered its losses after the Irish Parliament voted yesterday on passing the 6 billion-euro budget with pressures ongoing to pass votes on the 85 billion-euro package granted from the EU and IMF last month.

The Irish news calmed markets causing the gold to take a breather, yet investors are still suspicious the contagion might spread to other highly indebted nations in the region.

In China, speculations are growing that China will raise interest rate to contain the high inflation, lowering demand on the metal as an inflation hedge.

On the other hand, the only support meanwhile for gold is coming from the Korean peninsula due to the escalation between the two Koreas.