Gold prices hit highest level since May '06

The price of gold broke through 700 dollars per ounce here on Friday, reaching the highest level since May last year on a variety of supportive factors, analysts said.
On the London Bullion Market, the spot price of gold touched 700.08 dollars per ounce, which was last seen on May 17, 2006.
This week, gold has won support from the falling US dollar, global geopolitical jitters, rebounding demand and ongoing concern about world financial markets.
A falling US currency ramps up demand for dollar-denominated commodities, such as gold, as they become cheaper for buyers holding stronger currencies.
Geopolitical concerns in the Midde East have also attracted buyers to the precious metal, which is regarded as a safe-haven investment in times of uncertainty.
On top of that, gold has drawn strength from strong oil prices.
Gold is energised by higher crude prices, which increase the risk of inflation. In turn, that increases the attractiveness of the precious metal as a defence against the erosion of the value of money.
The price of gold is not far off last year's peak. On May 12, 2006, the metal climbed to 730.40 dollars per ounce -- which was the highest level since 1980.