Gold hit a low of $926.40 an ounce (fell more than 1% ) on Tuesday after the US Treasury said it would support gold sales by the IMF, which holds more than 3,000 tonnes of bullion. The physical market was hectic with activity as gold’s fall attracted speculators as well as purchases from jewellery makers. Gold rised above $960 an ounce on Wednesday to its highest level ever, as oil hit another record above $101 a barrel and the US dollar fell against other currencies. Most commodities markets pushed higher on Wednesday with gold hitting a new record and copper, aluminium and silver near peaks. Investors view these metals as a hedge against the dollar and an alternative to other financial markets. Gold hit a new high of $973.10 an ounce on Friday, up more than 16% this year and needing only another 3% to hit the $1,000 mark.

Oil rose on Wednesday to $102, just cents off record highs, as US economic data forced the dollar into a deeper slump, moving a surge across commodities markets. Growing winter fuel demand in the United States and falling temperatures in Europe and indications from OPEC that the cartel will not increase production at its meeting next week, boosted oil. On Friday, crude oil hit $103 a barrel, breaking the inflation – adjusted high of $102.53 reached in 1980, fuelled by the weak dollar, a fire at a European gas terminal and problems with a pipeline in Ecuador. Oil extended its gains after a fire at the Bacton Gas Shell terminal in Norfolk, England, shut over 45 million cubic meters per day of gas supplies, about 13 percent of the UK national demand.

The dollar hit a record low beyond $1.50 to the euro on Wednesday after surprisingly weak US data and comments by the Federal Reserve that the central bank will keep cutting interest rates. Fed Vice Chairman Donald Kohn said that a weak economy was a bigger worry than inflation risks, suggesting a willingness to keep cutting rates from 3%. The dollar also hit an all – time low against a basket of currencies after reports showing US consumer sentiment hit a five – year low and consumer expectations slumped to the worst in 17 years, predicating more proof the economy may be in a recession. The euro surged to $1.5050, hitting its highest since the single currency was introduced in 1999. On Friday, the dollar dropped to $1,5200 against euro due to worries about the US economy, helping drive up prices of safe – haven gold and oil to all – time highs. Weak US economic data and a warning from Federal Reserve Chairman Ben Bernanke that some small US banks could fail raised expectations for more interest rate cuts in the world’s leading economy and deepened fears of a recession. Also, US 4th quarter gross domestic product came in weaker than expected and a report showed a big jump in initial weekly jobless claims. Separate data showed gross domestic product, which measures total goods and service output in the United States, rose in the fourth quarter at an annual rate of 0.6%, slowing almost to a halt from the 4.9% in the previous three months. The GDP report also contained worrying inflation data and new record highs in oil prices raised fears the economy would be hit by weak growth and unbounded price growth, recalling memories of 1970s stagflation.