Gold falls from record high on sell off by investors

Gold dropped after touching a new record high yesterday as the climb in price to near $1500 an ounce enhanced a wave of profit taking by investors.

The previous session, gold added $9.50 or 0.64% after closing at $1495.00, while gold price was setin London at $1493.00 per ounce inclining from $1484.50 during the AM fixing.

Meanwhile, gold is traded at $1491.41 after recording a high of $1496.25 and a low of $1487.40.

The debt concerns in the United States and Europe boosted gold prices to new highs as the woes triggered safety demand on the precious metal.

Yesterday, US stocks fell sharply after Standard & Poor's downgraded US government debt rating to negative from stable, while Moody's Investor Services downgraded ratings of many Irish banks after the cut to Ireland's credit rating by two notches last week to the lowest investment grade.

Now, there are fears in markets that the debt problems in the world's largest economies would hamper recovery which may give further support to gold and other safe havens.

On the other hand, the dollar was little changed against a basket of major currencies after advancing yesterday to a high of 75.80, according to the dollar index gauge.

With regard oil, it also fell today to a low of $106.54 a barrel compared with the day's opening level of $109.29.

Despite the gold's drop today, it may rebound again with the escalation of debt crisis in Europe and the unrest in the Middle East. However, the tightening by central banks to curb inflation may push gold prices to the downside.

China raised the bank's reserve requirements and said will continue further tightening to ease inflationary pressures, while today ECB governing council member Nout Wellink mentioned that the ECB will continue its tightening till shoring up inflation to the targeted 2%.

Among other precious metals, platinum rose to $1780.50 from the day's opening of $1775.50, palladium inched up to $733.50 from $732.50 and silver ticked up to $43.05 from $42.98, as of 07:25 GMT.