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Last Updated: Tuesday, 8 January 2008, 20:25 GMT
Gold at record on firm oil prices
Gold bars
The price of gold rose more than 30% last year
The price of gold has soared to an all-time high of $881.28 an ounce, driven by the weak dollar, strong oil prices, and global inflationary fears.

Gold, which becomes cheaper for holders of other currencies when the dollar weakens, is seen as a haven in times of uncertainty and oil-led inflation.

Oil has remained firm at close to $96 a barrel, but off last week's $100 peak.

Gold prices increased by more than 30% in 2007, with traders saying its next target will be $900 an ounce.

Power cycle

Since the global credit crunch which followed the collapse of the high-risk sub-prime home loans market in 2007, gold has surged as investors looked for investments that were perceived as lower risk.

The so-called "flight to quality" has been so strong that gold has been breaching prices last seen during the midst of the inflation crisis in 1980, when it was feared the Iranian revolution may lead to runaway oil prices.

Gold prices have been on an upward trend since the late 1990s and that looks set to continue because demand is on the increase at a time when there is no sign of any great increase in global gold output, analysts said.

Other precious metal commodities have also been boosted by strong demand and the weak US dollar, with platinum, palladium and silver matching gold's striking performance.

Commodities soaring

In the past couple of years platinum has seen similar rises to gold, with prices up by close to 30% since the beginning of 2007.

On Tuesday, platinum rose to $1,540 an ounce, closing in on the record $1,553 an ounce set earlier this month.

Palladium, another metal in the platinum group, has also risen sharply since August, and silver has also enjoyed a strong run.

On Tuesday, palladium and silver prices were both up on the previous day.

The lure of commodities has been good news for miners - with 2007 being a powerful year for most of the biggest names.

Rio Tinto was top performer in the FTSE 100 stock index, up 96% in 2007, with shares in other miners like Xstrata and Vedanta Resources also showing impressive returns.

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