Gold standard could be answer to helping currency movements

Robert Zoellick said a new system of floating currencies is needed to replace the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.

He 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 yesterday on concerns of a continued weakening dollar trend after the US Federal Reserve last week acted to resume buying Treasurys.

"The dollar is losing its relevance, especially with the emergence of Asian 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 Mr Zoellick's comments.

"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.