June 28, 2008	Saturday	Jamadi-us-Sani 23, 1429

LONDON, June 27:- Gold rallied to its strongest level in a month on Friday as record oil prices, a weak dollar and tumbling world stocks boosted the metal’s safe-haven appeal.

Gold climbed to $924.10 an ounce, its highest since May 27 and was at $922.00/923.00 an ounce by 0935 GMT, well above $912.60/913.60 an ounce late in New York on Thursday.

World stocks fell to a three-month low as a fast deteriorating global inflation picture fanned concerns over the outlook for corporate profits. There seems to be a very clear link between people’s worries over the economic outlook and investment in gold, said Daniel Smith, an analyst at Standard Chartered.

The weaker dollar environment has also helped but there does seem to be a clear link between equities and gold. It’s safe-haven buying. In theory, rising energy prices boost gold’s appeal as a hedge against inflation, while a weaker dollar makes the metal an attractive alternative investment.

Despite the gains, gold was still well below a lifetime high of $1,030.80 an ounce hit in March. Oil leapt to a new record near $142 a barrel on Friday, extending gains after surging nearly 4 per cent in the previous session.

The dollar steadied after sliding in the previous session but held near three-week lows versus the euro.

The US currency had dropped as investors reduced their expectations for a Federal Reserve rate hike this year, and as US stocks tumbled.

After the Fed came in and talked about its inflation concerns the market now sees the possibility of rate rises as relatively low and that is really starting to pull on the gold price which is particularly sensitive to FX and global rates, said Daniel Hynes, metals strategist at Merril Lynch.

In industry news, the market also kept an eye on the supply side threats. In Peru, miners are going ahead with a plan to strike for better benefits starting on Monday.

Spot platinum rose to $2,065.00/2,080.00 an ounce from $2,057.50/2,077.50 late in New York. Spot palladium rose to $466.50/474.00 an ounce from $464.00/472.00 an ounce.

Silver edged up to $17.40/17.46 an ounce from $17.22/17.28 late in New York.—Reuters