Johannesburg — GOLD traded at record highs yesterday as uncertainty over the US presidential election drove the US dollar lower, boosting the metal's appeal as a safe-haven asset and underscoring the sentiment that the local currency would remain strong in coming days.

Gold rose as high as $430,46 an ounce, up 1,26% from its previous close, and was near its 16-year peak of $431,05 an ounce. Gold has gained about 16% since mid-May, on the back of a weaker dollar.

"The main reason for the strength in the gold price is a significantly weaker dollar," Econometrix Treasury Management analyst George Glynos said yesterday.

"US data has not inspired much confidence. It has largely disappointed," Glynos said.

The euro gained 0,9% to stand at 1,2829 against the dollar.

"The ability of the US to finance its trade deficit has been brought into question, and that is still lingering in the markets," Glynos said.

The weaker dollar is making it cheaper for other currency-holder to buy dollar-denominated gold.

"The dollar came within a whisker of record lows against the euro, and it happened very quickly" Absa treasury economist Chris Hart said.

"There is nothing at this stage to stop the dollar from weakening further so we could see some more rand strength in the coming days."

Glynos said there was a lot of uncertainty in the market about the outcome of the US elections next month.

"Uncertainty does not allow the market to take a clear direction," Glynos said. The rand also strengthened against the dollar, gaining 0,45% to 6,1450 to the dollar.

BOE Private Clients' head of investments Johann van Zyl said yesterday that the possibility of exchange controls being lifted would not necessarily weaken the rand.

"Relaxation of exchange controls is a huge vote of confidence for any country," Van Zyl said. Analysts said SA's growth prospects were favourable going forward.

Oil prices also reached new highs in New York, at $55,67 a barrel, on fears that a strike in Norway, the world's third-biggest exporter, could reduce supplies.

The rise also led to concerns that high prices may slow US growth. "There is a speculative element to the high oil prices," Glynos said.

Disruptions to production in Nigeria, Russia, Iraq and Norway, and the upcoming northern hemisphere winter have put pressure on producers, who are struggling to meet demand, Glynos said.

"The speculation could be reduced if these issues were sorted out," said Glynos. Hart said that because of crude supply fears high oil prices could be around for some time.

"Inflation figures coming out this week will help to paint a picture of how oil is or isn't affecting the country's inflation rate," Hart said.

Statistics SA (Stats SA) is due to release consumer inflation and producer inflation figures tomorrow and on Thursday respectively.

Analysts remain confident that inflation will remain within the Reserve Bank's target range of 3%-6% for the remainder of the year.

The central bank's targeted measure, CPIX (consumer inflation excluding mortgages) slowed to a record low of 3,7% year on year in August, down from 4,2% in July.

The South African economy's growth prospects remained favourable going forward, analysts said, driven by strong consumer spending, low inflation and low interest rates.

The economy grew at 3,9% in the second quarter - its highest level since 2002 - after low interest rates and inflation lifted consumer confidence.

Stats SA is set to revise gross domestic product (GDP) figures upwards next month, after new data suggested higher levels of economic activity than previously stated.

Economists have forecast that GDP growth could end the year at 2,7%. GDP grew at 1,9% last year.