Gold hits new record high as US dollar weakens

The weakening dollar has prompted investors to buy gold

The price of the precious metal hit a new record high for the third straight day of $1,569.30 on the back of a weakening US dollar.

The gold price has risen 7% over the last month as investors have sought a save-haven against inflation and the softer US dollar.

In late US trade the precious metal reached a record of $1,569.30 an ounce.

Traditionally, investors turn to gold at times of uncertainty and rising prices.

But analysts also said the falling US dollar had helped bolster the metal's value.

Over the past year, the US dollar has dropped against the euro and the pound by 12% and 9% respectively.

The dollar continued to slide against several major currencies after new economic data was released showing that US growth had slowed in the first quarter of 2011 to 1.8%.

As gold is priced in dollars, any fall in the currency means it becomes cheaper for investors using other currencies to buy.

"If the dollar continues to weaken, then it's only likely to boost gold as well as silver as the inverse relationship between the two assets persists," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

"I would say that for gold I am still looking for it to hit $1,600 this year."

Silver

Meanwhile, the price of silver remained in sight of record highs thanks to the weakening dollar as well as increased demand in Asia.

Earlier this week, the precious metal hit an all-time high of $49.793 and is up almost 60% on a year ago.

As the global recovery continues, some analysts expect demand for the metal, which is used in industry such as electronics, to rise further.

But others warn the metal's high price could come at a cost.

"In the long term, I think, if we see silver prices at such a high level, then it could hurt the industrial demand," added Ong Yi Ling.

In 2007, 455.5 million ounces of silver were used for industrial applications according to the Silver Institute.