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Gold Hits Record High as US Dollar Weakens

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Officials in several Middle Eastern capitals are denying a published report that petroleum producing countries and other nations are plotting to replace the U.S. dollar as the dominant currency in global oil pricing. The denials have not prevented the dollar from weakening against other major currencies, while oil prices rose and gold reached an all-time high.

Already battered by a weak U.S. economy and a rising tide of American indebtedness, the U.S. dollar suffered a blow at the hands of a British newspaper. The Independent reported Tuesday that several Arab states, along with China, Russia and a number of other countries, were holding secret meetings on a plan to end the worldwide pricing of oil in dollars and replace it with a basket of currencies.

Finance and energy officials in several oil-rich Middle Eastern nations flatly denied the article. The Associated Press quoted a spokesman for Russian Prime Minister Vladimir Putin as saying the report is "not serious".

But the damage might already have been done. The dollar fell against other major currencies, including the Euro and the Japanese Yen. The newly-weakened dollar helped push up commodity prices. Oil rose above $71 a barrel, while gold reached a new record-high, selling at more than $1,040 an ounce.

This is not the first time that the future of the dollar as the world's preeminent currency has been questioned - not only in oil pricing, but also as the world's reserve currency.

But former U.S. Deputy Treasury Secretary Roger Altman says speculation about replacing the dollar is premature.

"The dollar is going to remain the primary reserve currency around the world for the foreseeable future," Altman said. "I really do not think there is any doubt about that. And the reason is that there is no alternative to the dollar."

Altman spoke on Bloomberg Television. The former deputy treasury secretary added, however, that real challenges do exist to the health and strength of America's currency.

"The issues around the dollar are not so much what OPEC [Organization of the Petroleum Exporting Countries] will do, but rather the more fundamental questions, which have to do with the economic outlook in the United States and, of course, the fiscal picture in the United States, which is a very threatening one," Altman said.

On Tuesday, Australia became the first industrialized nation to raise interest rates since last year's financial crisis, causing the Australian dollar to rally.

Federal Reserve Chairman Ben Bernanke has said he does not foresee raising U.S. interest rates from record lows in the near future.