Gold futures in New York shot to a 25-year high above $650 early Friday, buoyed by a falling dollar and a pop in silver triggered by the launch of the first silver-backed security, dealers said.
Gold jumped 1.6 percent and silver surged 4 percent by midmorning as players built positions in the precious metals ahead of the weekend. Higher oil prices and tensions over Iran's nuclear capabilities also fuelled the advance.
By 11:11 am EDT, June delivery gold had climbed $16 to $652.30 per ounce on the New York Mercantile Exchange's COMEX division, in a range of $634 to $652.50, a new contract high.
Prices surged on investment buying fuelled by tensions over Iran, high energy prices and uncertainty over the US economy. "People for a long time had not been interested in the precious metals to any big degree, but now you have started to see them look at them once again as a flight to quality in terms of asset diversification," Platt said.
Gold rose as the dollar fell to a seven-month low after a report showing robust US economic growth did little to overturn views that interest rates are close to a peak.
Gold also tracked crude oil higher in morning action, with US oil futures up 1 percent at $71.70 per barrel on jitters over Iran's nuclear ambitions. Estimated golf volume was 17,000 lots by 10 am. Spot gold surged to $644.30/645.30 an ounce, against its last New York close at $634.20/5.20.
Silver raced up as trading in the first ever exchange-traded fund linked to silver kicked off on the American Stock Exchange on Friday. COMEX July silver rallied 51 cents to $13.10 an ounce, dealing from $12.54 to $13.13.
Silver, used in jewellery, fabricated products and industrial applications, touched a 23-year high last week in futures at $14.69 on anticipation of the ETF launching.
Spot silver rose to $13.04/13.14 an ounce Friday, versus $12.61/12.71 previously. Friday's fix in London was at $12.5550.
NYMEX July platinum shot up $9.90 to $1,156 an ounce, which was shy of Thursday's record high of $1,159.80. Spot platinum traded at $1,143/48. June palladium gained $3.60 to $367.90 an ounce. Spot palladium fetched $362/367 an ounce.
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