Concerns about a possible US recession are seeing investors buy up commodities such as gold as an alternative to company shares and the US dollar.

Since the beginning of the year the value of gold has increased by about 20%, after it rose 32% in 2007.

Analysts said that gold would stay close to the $1,000 mark as long as the US dollar and economy remained weak.

"Every bit of bad US economic data boosts gold in two ways," said Fortis Bank.

"First because it reinforces the return of its role as a safe-haven asset, and second because the dollar falls on expectations of further Federal Reserve rate cuts."

The dollar fell further on Wednesday against key currencies, including the euro and Japanese yen.

Analysts are predicting that it could fall further.

The highest unemployment rate for five years, and high fuel and food bills are hitting consumer morale in the US, and it is expected that interest rates will have to come down further to encourage spending.

That is likely to weaken the dollar and accelerate inflation, analysts said.

The gold price has also been boosted by power cuts that have halted production at some of South Africa's biggest mines.

(BBC)

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