London, October 28:

Forget shares — one of the best investments over the past year has been gold. Last week, it soared to its highest level in almost 30 years, closing at $779.14 per ounce, 30 per cent up on this time last year.

That marks a remarkable resurgence for the precious metal which spent much of the past decade in the doldrums as investors’ thirst for riskier investments, combined with central bank gold sales, sent the price tumbling. Now, however, falling interest rates, a weakening dollar and a rise in demand from wealthy Indians are helping to fuel price rises.

“A weak dollar is a big part of the reason,” said Mark Mathias, managing director of Dawnay Day Quantum. “But lower interest rates are also good for gold as, by holding it, you are giving up the opportunity of earning interest on holding cash.” There has also been speculation that some Asian central banks are selling some of their dollar holdings and buying gold as protection against plunging dollar — which has lost more than eight per cent of its value against sterling in the past year.

He points out that, adju-sted for inflation, price is only at half its peak in doll-ar terms. But he adds that much of stores of bullion are still held by central ba-nks and that, if sold could end the strong bull run.