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Gold rises to new high -

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SHANE MCLEOD: Fears about inflation and a weaker US dollar have sent the gold price to another
record high for the third day in a row.

The market price of gold has jumped to just above $US1,050 an ounce, and it could climb higher.

The Australian dollar is also on the move against the greenback, spurred by US dollar weakness and
Australia's rise in interest rates.

More from finance reporter Sue Lannin.

SUE LANNIN: That traditional safe haven gold is on the rise again.

The US budget deficit is growing, interest rates are near zero in North America and that's making
the US dollar weak.

Commodities analyst Jonathan Barrett says everyone wants to buy.

JONATHAN BARRETT: The weaker dollar, their concerns of inflation, there's demand out of India for
physical, so all these things are combining to push the price, and what we actually feel is
occurring is that we've broken to record highs and then we've got those people that then buy into
the market on a break to new highs.

SUE LANNIN: How high will it go in the short term?

JONATHAN BARRETT: One-thousand-and-fifty is the key. If momentum can continue and we break 1,050 it
can quite happily trade to 1,070 but I must stress, we've got to see those drivers actually being
reinforced in order for that price to remain at these levels.

SUE LANNIN: In the long term gold will continue to rise because there is a shortage of supply and
fewer and fewer new discoveries.

But Jonathan Barrett doesn't think it will break the $US2,000 mark anytime soon.

JONATHAN BARRETT: Look, I think that at the moment we've got that supply, supply equals demand. If,
obviously supply, ah, if demand picks up then, you know, well is there enough supply to meet the
market?

I think that is an interesting question. We haven't explored everything we need to explore, and as
the price moves higher then it becomes more efficient to actually mine deeper and extract gold from
different areas and that becomes more.

Also, one has to think that there's a lot of scrap out there, scrap gold and obviously that comes
back to the market.

Overall, US 2000, I think that's something we just have to take each step as it comes, because as
the price goes over, it goes higher, it only introduces more people to the market.

SUE LANNIN: Commonwealth Bank chief currency strategist, Richard Grace, says the weak US dollar is
the key driver for the rise in the gold price but he says speculators are also on the hunt because
of a crackdown on oil trading.

RICHARD GRACE: The regulators are trying to stamp out speculation in oil and the reason for that is
because of what we saw last year when oil went over towards $150 a barrel and really helped tip the
global economy into a recession. So regulators are trying to stamp out speculation in oil and so
speculators are turning to other markets such as gold to where they can undertake some speculation
in the markets without the fear of regulators tracking their positions too heavily.

SUE LANNIN: The weakness in the greenback has also boosted the Australian dollar, plus the Reserve
Bank's rise in interest rates.

Richard Grace says he expects it to go higher.

RICHARD GRACE: Looking for it to reach 93 cents by the end of the year from its current level and
then press on into the middle of next year up to around 98 cents.

SHANE MCLEOD: The Commonwealth Bank's, Richard Grace, ending that report by Sue Lannin.