LONDON, Aug 27: Gold prices shot up almost $11 in London on Wednesday as a market frenzy was fuelled by a slight decline in the dollar’s value and strong speculative purchasing.

On the London Bullion Market, the price of an ounce of gold stood at $371.25 on Wednesday afternoon, up from $360.50 a day before.

The sudden three-month high arose partly because a falling dollar left the metal, which is denominated in the US currency, cheaper for non-dollar purchasers.

This effect was magnified by a regular monthly expiry of contract options which took place on Wednesday afternoon, said UBS Warburg analyst John Reade.

“So gold price broke through a key resistance level around $367.50 an ounce, triggering some stops,” he said.

“It’s difficult to say where gold is going to go next. We saw good speculative fund buying behind the move.”—AFP