THE dollar was less than US0.5c shy of parity with the US dollar at noon, after a sudden rush of gold buying pushed the unit to a new 27-year high.
At midday (AEDT), the dollar was trading at US99.47c, up US1c from yesterday's close of US98.46c.
Since 7am, the local unit traded between US98.93c and US99.71c.
The latter was the highest the Aussie has been against the US dollar since it was floated on foreign exchange markets on December 8, 1983.
CMC Markets foreign exchange dealer Tim Waterer said persistent US dollar weakness was aggravated by a sudden mid-morning rush to buy gold, sending the cost of the precious metal to an all-time high.
"The strong gold price is reflective of what's going on with the US dollar," he said.
"The fact that the Aussie has put on half a US cent or so this morning shows it doesn't take a lot to get it there."
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The spot price of gold at 11.48am was $1375.60 per fine ounce, the highest on record, and up $20.12 on yesterday's local close of $1355.48.
The dollar is a commodity currency and will most often tick higher with the price of resources.
Mr Waterer said ongoing speculation about when the US Federal Reserve will re-start its quantitative easing program has weakened the US dollar.
The Fed today published minutes from policymakers' September meeting, in which they said they were prepared "to provide additional accommodation if needed" to support the recovery.
Expectations quickly firmed that the Fed was close to enacting a new bond-buying program, perhaps as soon as November.
The Fed employed the same measure as a tool to combat the effects of the global financial crisis in 2008 and 2009.
Mr Waterer said there was a possibility the local unit could reach parity with the US dollar during today's domestic session, but he expected it to run into some selling pressure at US99.90c.
Meanwhile, bonds were weaker at noon.
At midday on the Sydney Futures Exchange, the December 10-year bond futures contract was at 94.950 (implying a yield of 5.050 per cent), down from 94.975 (5.025 per cent).
The December three-year bond futures contract was unchanged at 95.130 (4.870 per cent).
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