Gold hit record highs above $1,270 an ounce on Tuesday in its biggest one-day rally in four months, as the US dollar declined broadly after upbeat data failed to convince investors to shift into risk-linked assets. Gold is now on course for a 15 percent gain in 2010, fuelled largely by investor nervousness that stemmed from the fallout from the eurozone debt crisis and from economic data that has suggested global economic growth may be losing momentum.
Spot gold was at $1,269.65 an ounce by 1515 GMT, up from $1,245.25 the day before, having hit a record high of $1,271.20 earlier in the session. US gold futures for December delivery were last up $24.3 an ounce at $1,271.20.
"It's continuing the trends that we've seen through this year really. Equity markets just remain very, very lacking in confidence, no one is prepared to put positions on and stick with them for any length of time," said Credit Suisse precious metals strategist Tom Kendall.
This year has seen an expansion in open interest in US gold futures and hefty flows into exchange-traded products backed by physical bullion and even if the economic data improves, some analysts believe gold has room to rally. "The funds are certainly doing some buying ... who else is it going to be? It's not producers buying it back, it's investors. And investors, whether rightly or wrongly, believe in this and that is the message," said ANZ head of sales Peter Hillyard. Spot silver was last at $20.42 an ounce, up from $20.02 the day before and on course for its third consecutive day of gains.
In the platinum group metals, platinum leapt to its highest level since early August, just below $1,590 an ounce, to be last quoted at $1,587.00, against $1,543.65 on Monday. This pushed the platinum/palladium ratio - the number of ounces of palladium needed to buy one ounce of platinum - to around 2.88, its lowest level since April 2004. Palladium hit its highest in four months, trading above $550 an ounce.
Palladium, which is predominantly used in the production of auto catalysts, is on track for a 33 percent increase this year and is one of the top performers of the commodities complex. Palladium was last at $550.00 up from $524.95 on Monday, set for its biggest daily rally since late May.
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