After a 27-year hiatus, gold temporarily returned to the lofty price of $800 an ounce on Wednesday. But that number, which made jaws drop in 1980, was unlikely to shock anyone investors or even consumers hankering after a 14-karat necklace.
Gold prices have surged more than $100 an ounce in two months as a weak dollar, record high oil prices and concerns about world political tensions have increased the allure of precious metals as a safe haven investment.
The Federal Reserve's decision to lower its benchmark interest rate for the second time in as many months helped vault gold futures over the $800 bar on Wednesday. An ounce of gold gained $7.50 to settle at $795.30 an ounce on the New York Mercantile Exchange, then climbed to a peak of $800.80 ounce in later electronic activity.
The U.S. dollar fell to a record low against the euro and tumbled versus a dozen other major currencies in response to the Federal Reserve cutting interest rates for the second time in two months.
The dollar touched $1.4504 euros before declining to $1.4474 per euro in New York trading.
The U.S. Dollar Index traded on ICE Futures U.S. in New York declined to 76.465, the lowest since the index began in 1973. The index is headed for its fifth drop in six years.
"The stock market is going to think very highly of this (rate cut), but it will continue to undermine the dollar," said Michael Woolfolk, senior currency strategist at the Bank of New York.
"The perception is that the global economy will hold up well and people are buying higher-yielding currencies (than the dollar),"said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston.