Zoellick seeks new gold standard debate - report
Leading economies should consider readopting a modified global gold standard to guide currency movements, said World Bank president Robert Zoellick.
Writing in the Financial Times, Zoellick said a "Bretton Woods II" system of floating currencies is needed to replace the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.
Zoellick called for a system that "is likely to need to involve the dollar, the euro, the yen, the pound and (yuan) that moves towards internationalisation and then an open capital account."
He added: "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."
Gold hit to a record high at $1,398.35 an ounce in early trade on Monday on concerns of a continued weakening dollar trend after the U.S. Federal Reserve last week acted to resume buying Treasurys.
"The dollar is losing its relevance especially with the emergence of Asia economies, so a more neutral benchmark may be required. Gold, amid all the recent uncertainty, is proving its worth," said ANZ's senior commodity analyst Mark Pervan.
Gold later retreated to around $1,391 an ounce as speculators booked profits, and other analysts said the bullion market was still digesting Zoellick's comments.
"Going forward that would be something that we could look towards, but it's not going to happen within a short period of time," said Ong Yi Ling, analyst at Phillip Futures in Singapore, adding that gold prices barely reacted to the comments.
The dollar rose sharply on Monday as unwinding of dollar short positions that began with solid U.S. jobs data snowballed, pushing down the euro to its lowest level since the Fed embarked on fresh easing last week.
[Source: Reuters, Singapore, 08Nov10]
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