Dollar's decline helps gold glitter

DEMAND for gold sparkled in the third quarter, despite a spiralling in its price to levels not seen for 16 years.

Figures today from the World Gold Council show that consumer demand for the yellow metal - including jewellery and retail investment - was up 6% in tonnage terms and 17% in dollar terms on a year earlier. However, this was down on the previous quarter, when demand was up by 11% and 25% respectively.

Spot gold rose more than $3 a troy ounce to a 16-year high of $452 this morning. Dealers said the rise was driven by an ailing dollar in conditions made thin and volatile by the US thanksgiving holiday.

Funds have piled into the metal as the dollar has fallen. It also benefited from a wider swoop on commodities. During the third quarter gold averaged $401.30 an ounce against £393.27 in the previous three months. It has since come within a whisker of $450 - its highest since 1988.

James Burton, chief executive of the World Gold Council, said: 'Reports from the main consuming markets indicate that buyers are now not only accustomed to prices in excess of $400 per ounce, but also that they are prepared for possible further price rises.'