24/07/07: Dollar continues to buoy bullion

Bullion continues to be bolstered by the weakening dollar, with gold futures climbing to near $690 per ounce on Tuesday.

On the New York Mercantile Exchange, gold for August delivery rose as high as $688, settling back down at $684.60, MarketWatch reports.

Analyst Peter Grandich explained the relationship between the yellow metal and the greenback: "The number one factor for gold is its inverse relationship to the US dollar. If the dollar is having a funeral, gold is almost certain to have a party."

Factors affecting dollar sentiment include concerns about the US economy and the subprime lending sector. The dollar has also fallen against other major currencies including the British pound.

"Our forex strategists continue to see the sub-prime and credit concerns as a US rather than a global issue and as such expect broader dollar weakness, in turn this bodes well for gold in the near term," Barclays Capital analysts told AFX.

Some commentators believe that gold could rise above $800 an ounce next year.