Gold prices jump as US dollar tumbles

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By SARA LEPRO

Gold prices jumped Friday as the dollar sank to its lowest level in months against the euro and the British pound.

Demand for gold tends to rise when the dollar is weak as investors seek protection against inflation, which can be triggered by a falling greenback.

The dollar has weakened considerably since March as investors move out of cash holdings and into riskier assets like stocks on hopes for an economic recovery. Investors are also worried that the massive amounts of money the government has been pumping into the system could lead to inflation.

That has been a boon for commodities like gold and oil. Oil is priced in dollars, so when the U.S. currency falls, oil becomes cheaper for foreign buyers.

Gold prices jump as US dollar tumbles - BusinessWeek

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