The dollar fell on Tuesday towards year lows against the euro and the yen after a report that Arab states and other countries were contemplating an end to the U.S. currency’s role in the pricing of oil.

The selling was stoked by an article in Britain’s Independent newspaper that said secret meetings were taking place between Arab states, China, Russia, Japan and France, to end dollar dealings for oil and moving instead to a basket of currencies, including the euro, the yen and the Chinese yuan.

Officials in several of the countries either denied talks or said they had no knowledge. But the denials did not stop the dollar selloff. By early afternoon London time, the dollar was down 0.5 per cent at 89 yen, while the euro was up by 0.6 per cent to $1.4729.

Further sustained falls could see the dollar fall below its multi-year low of 87.11 yen, and the euro break above its two-year high of $1.4842, achieved last month.

Meanwhile, Robert Zoellick, a former U.S. trade representative who now heads the World Bank, warned that the currency’s status as the world’s leading reserve currency should not be taken for granted.

The dollar also suffered against the euro from a decision by the Australian central bank to raise interest rates — taken by markets as a sign recovery may be taking hold.

New high in world gold

The price of gold struck an all-time high at $1,038.65 an ounce here on Tuesday as the dollar fell on a reported plan by Gulf states to stop using the greenback for oil trading.

Gold reached this level in late afternoon trade on the London Bullion Market, beating the previous record high of $1,032.70 an ounce struck in March 2008.

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