Gold Extends Gains as Dollar Weakens

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NEW YORK - Gold prices have rallied to another new high on the back of a weaker dollar.

Gold is up $2.40 at $1,087.30 an ounce, after earlier rising to as high as $1,098.50.

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.
Demand for gold has risen steadily as record-low interest rates pressure the dollar and drive investors to look for higher returns in other assets.
The Federal Reserve on Wednesday 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, supporting higher commodity prices.
Copyright 2009 by The Associated Press.  All Rights Reserved.

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Sara Lepro

Sara Lepro

AP Business Writer

The Associated Press is the backbone of the world's information system serving thousands of daily newspaper, radio, television and online customers with coverage in all media and news in all formats. It is the largest and oldest news organization in the world, serving as a source of news, photos, graphics, audio and video.