Gold Nears $1,100, Extends Gains As Dollar Weakens

SARA LEPRO

NEW YORK (AP) — Gold prices rallied to another new high Wednesday on the back of a weaker dollar.

Gold for December delivery rose to as high as $1,098.50 an ounce, before settling up $2.40 at $1,087.30 an ounce on the New York Mercantile Exchange, adding to big gains the day before.

News that India's central bank bought nearly $7 billion worth of gold from the International Monetary Fund triggered a frenzy of buying on Tuesday that carried over to Wednesday as the dollar weakened.

Gold is seen as a hedge against a falling dollar and inflation.

Demand for gold has risen steadily over the past few months as record-low interest rates pressure the dollar and drive investors to look for higher returns in other assets.

On Wednesday, the Federal Reserve kept its benchmark interest rate at a record low of near zero, signaling that it is not yet concerned about inflation. But the low rates will likely weigh on the dollar further and should support higher commodity prices in the near term. A weaker dollar makes dollar-denominated commodities more attractive for foreign buyers.