Gold hits near-25-year peak, targets 550/oz level

Gold scaled a new near-25-year peak on Monday as fund managers poured money into the metal due to worries about inflation and dollar weakness against the yen, dealers said.

Market talk that some central banks might buy gold to increase the metal8217;s share in their reserves boosted sentiment. Gold also gained in other currencies. 8216;8216;In the near term, we are very close to an important level of 550 an ounce and I would expect that we would trade at that level sometime this week,8217;8217; said John Reade, precious metals analyst at UBS Investment bank.

Spot gold rose to 544 an ounce in Asian trade, its highest price since March 27, 1981, when it hit 547.25.Market talk that China and other central banks in Asia8212;which jointly have 2.6 trillion in foreign currency assets8212; may be looking to diversify some of their reserves into gold has underpinned sentiment since late last year.Stronger gold prices elevated mining shares in Australia,the world8217;s second-largest bullion producer after South Africa. 8212;Reuters