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Gold within striking distance of key $730 level

Gold prices were up today, within striking distance of last year’s 26-year high as the dollar tumbled after the US Federal Reserve slashed benchmark interest rates.

In early trade spot gold was at $724.10/724.90 per troy ounce from $719.30/720.30 late in New York yesterday. Earlier it hit $726 an ounce, a 16-month high and only $4 away from the 26-year high of $730 set in May last year. Prices of the precious metal now are only about $120 away from an all-time high of $850 an ounce, fixed in London on January 21, 1980. Traders say the $730 level will be difficult to overcome and that the market may need several attempts.

The dollar hit a 15-year low against a basket of currencies today, extending a slide after the Federal Reserve surprised markets with a hefty half-point rate cut that eroded the US currency’s yield appeal. “There’s certainly a chance that gold makes a new high, given euro per dollar is approaching $1.40,” said Wolfgang Wrzesniok-Rossbach analyst at Germany’s Heraeus Metal Trading. (