Gold hit a record high on Monday as investors hedged against a weak dollar while Asian shares edged higher after upbeat reports from U.S. retailers underpinned confidence the global economy is recovering.
Gold punched a record above $1,126 an ounce, and sending platinum to its highest level since September 2008, as the dollar <.DXY> dipped 0.3 percent against a basket of currencies, and on bullish forecast from U.S. investment fund BlackRock.
Markets are focused on U.S. President Barack Obama's visit to China that began on Sunday as he is expected to discuss China's yuan currency, which the U.S. believes is undervalued, with Chinese leaders.
Gold, which has gained 10 percent in the past 2- weeks, was further supported by forecast from investment fund BlackRock, a manager and advise to the U.S. Federal Reserve, that gold would rise further and central banks would be net buyers of gold this year.
The most recent break-out in the gold price in U.S. dollars has caused most gold prices to start trending higher at the same time, Evy Hambro, who runs two BlackRock commodities funds which are among the world's largest commodities funds, said in Sydney.
He added that investors were now looking for gold to rise in other commodities as well as U.S. dollars.
When you start to see the price rising in a range of different currencies, it is a clear sign of a very strong market to come, Hambro said.
HITACHI SLUMPS 8 PCT
Asian shares picked up after a slow start. The MSCI index of Asia Pacific stocks traded outside Japan and the Thomson Reuters index of regional shares were both up 1 percent.
Japan's Nikkei average <.N225> however was flat as investors digested third-quarter growth data, which showed Asia's biggest economy grew at its fastest pace in more than two years. But it is expected to slow as falling wages will hurt consumption.
News of big share issues also dampened investor sentiment after sources said Japan's biggest bank Mitsubishi UFJ Financial Group <8306.T> would issue about $11 billion in new shares.
Shares of electronics giant Hitachi Ltd slumped 8 percent after sources said the company would raise up to $4.5 billion to shore up its battered capital base. Mitsubishi shares were down 5 percent.
But it won't end here -- there are other companies out there in the same situation and we're likely to see a whole rush of share issuance, raising some supply concerns, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities in Tokyo.
Investors across the region appeared cautious after a recent rally in Asian shares, which has been driven by increasing evidence the global economy is on a recovery track. That view was reinforced with some upbeat U.S. earnings reports on Friday from Walt Disney
They helped push the Dow Jones <.DJI> up 0.7 percent. The MSCI Asia-Pacific index, however, has already surged nearly 70 percent this year.
Shares in Hong Kong and China outperformed the region, rising nearly 2 percent, as they continue to attract strong fund inflows following bullish Chinese economic data in the past week.
Asian currencies were firm and the Korean won hit a near 14-month high at 1,154.3 to the dollar at one point.
Currencies in the region have been lifted by expectations China could soon resume appreciation of its yuan currency after an 18-month hiatus, with President Obama's China visit this week expected to add pressure on China to allow appreciation.
The head of the IMF, Dominique Strauss-Kahn, who is also in China, on Monday called for a stronger yuan to increase domestic consumption in China and help ease global imbalances.
However, the Chinese Commerce Ministry on Monday said China should maintain a stable exchange rate while a Finance Ministry official made a thinly veiled criticism of the U.S. for undermining the dollar with its policies.
The oil price also benefited from a weak dollar and was up nearly 1 percent, rebounding above $77 a barrel.
(Additional reporting by Elaine Lies in TOKYO and James Regan in SYDNEY; editing by Kazunori Takada)