LONDON, Nov 6: The dollar plunged on Tuesday to a new all-time low against the euro on fears for the future of the US financial sector, while gold hit $820 an ounce, its highest reading since 1980.
In early deals, the single European currency surged to an historic $1.4543. It later traded at $1.4538, which compared with 1.4464 in New York late on Monday.
The price of gold rose to $820 an ounce on Tuesday, its highest level since 1980, as the precious metal was lifted by the weak dollar and fears of inflation spurred by record high crude oil prices.
Gold is seen as a good store of value amid inflation.
Traders said the US unit came under heavy selling pressure by investors worried that US housing market weakness will eventually dampen consumer spending and cause a slowdown in the world’s largest economy.
The banking sector has been, particularly hard hit, with Citigroup, the largest US bank, announcing huge losses stemming from a meltdown in the US high-risk -- or sub-prime -- mortgage market.
“The big imponderable remains the extent and valuation of sub-prime related losses and its impact on the economy,” said Calyon analyst Mitul Kotecha.
He added: “The fact that these concerns have originated in the US, following announcements of losses at US banks, has meant that the US dollar has failed to benefit from safe haven buying.” The dollar is usually regarded as a refuge in times of economic instability.—AFP
