Weak dollar pushes gold to record $1,201.63 an ounce

Gold peaked at $1,201.63an ounce on Tuesday

A weak US dollar has pushed up demand for gold to another record level.

Gold struck $1,201.63 (£722.69) an ounce on the London Bullion Market, after striking historic peaks over recent weeks.

The dollar index fell 0.8% against a number of currencies as fears about the Dubai debt crisis waned across international markets.

Demand for gold has been fuelled by moves by central banks to diversify assets.

A weaker dollar makes gold cheaper for users of rival currencies, which stimulates demand for the precious metal. In turn, this pushes up the price in dollars.

Gold prices were driven higher by the purchase of IMF gold by Sri Lanka's central bank last week.

The International Monetary Fund (IMF) said it had sold 10 tonnes of gold to Sri Lanka for $375m in order to restructure of its financial resources.

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