Gold approaches all-time high as global stocks drop

The shiny metal advanced for the second day on Wednesday as Asian shares trailed theirUS and European counterparts fall yesterday on renewed fiscal woes in Europe which boosted demand on bullion as a store of value and safe haven.

Yesterday, industry group said ten German lenders may need as much as 105 billion euros to meet regulations, while Wall Street reported that banks stress tests understated some of bank's holding to combat the rise in sovereign debt.

The worries pulled the European common currency against majors where it dropped today to $1.2680 from yesterday's opening at $1.2871.

Accordingly, gold added $8.60 or 0.69% to close at $1255.42 an ounce yesterday. Gold price was setin London on Tuesday at $1256.75 per ounce inclining from $1247.25 during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, remained unchanged at 1,294.44 on September 7.

The clear breach of $1250.00 resistance level paved the way for gold to rise further to a high of $1260.25 to become just few dollars from the lifetime high of $1265.05 recorded in June. Another breach to $1260 level may take the yellow metal to $1300.00.

Fiscal woes in Europe along with economic growth concerns in the United States gave an impetus to gold. Later in the day, the Fed will release Beige book survey which is predicted to show that recovery is waning in the world's largest economy.

On Monday, President Barack Obama introduced $50 billion infrastructure plan to create new jobs but said the plan will not have an impact immediately.

Oil was down to $73.72 a barrel from yesterday's closing of $73.75, impacted by the decline in Asian shares.

Among other precious metals, platinum rose to $1554.70 from the opening price of $1548.00., palladium edged up to $522.00 from $519.70, and silver rallied to $19.95 from $19.86, as of 08:10 GMT.