Gold drops from record highGold fell after touching record high yesterday as the drop in oil and rebound in dollar pushed the shiny metal lower on Wednesday trading.
Yesterday, gold continued its rally hitting a new fresh high of $1434.72 an ounce, taking advantage of the rise in oil prices on the back of the unrest in the MENA region.
The previous session, gold added $22.00 or 1.56% to close at $1433.15, while gold price was setin London at $1420.75 per ounce declining from $1414.50 during the AM fixing.
Yet, gold failed to remain above resistance at $1430 levels, the previous high recorded in December, as it is currently trading at $1428.70 after recording a high of $1434.22 and a low of $1427.55.
Among other precious metals, platinum inched down to $1816.00 from the day's opening of $1818.70, palladium slipped to $793.70 from $794.70 and silver ticked down to $33.40 from $33.46, as of 08:25 GMT
Oil dropped today to $99.56 a barrel after climbing to above $100 a barrel on Tuesday.
The ongoing escalation in Libya, which has the largest oil reserves in Africa, and tensions in Iran, the second largest oil producer in OPEC, as well as fears of the spread of protests to Saudi Arabia, which produces one fifth of the world's oil production, is increasing demand on oil.
At the same time, investors increase their purchases of gold as a store of value amid the elevating inflation levels which faced many Asian economies to raise interest rate more than a time and other central banks to raise inflation forecasts for the current year and next.
On the physical side, China is increasing gold buying even more than India, the biggest gold buyer in the world, where it purchased 200 metric tons in the first two months of 2011.
In the FOREX market, rebounded for the second day to 77.08 compared with the day's opening level at 77.01, as depicted by the dollar index gauge, yet it seems that gold is getting its direction now from the undergoing political events and oil movements rather than the dollar's behavior.
Though, the question remains whether gold will be able to resume its advance amid the geopolitical tensions in the Middle East and rise in oil prices or the high price will prevent buyers from purchasing gold.