Gold edged closer to the $1,000 an ounce mark on Monday, setting a record high for the fourth straight day after the dollar tumbled and crude oil held near an all-time high. Silver jumped to $20 an ounce for the first time since November 1980 to track gold. Platinum and palladium held near their recent highs.
While a firming yen ignited selling in yen-denominated Japanese precious metals futures. Gold jumped as high as $983.90 an ounce, partly driven by purchases from Japanese speculators who took advantage of the dollar's drop to a three-year low against the yen.
Gold was last quoted at $973.30/973.75 in New York on Friday. Gold has gained around 18 percent in 2008 as investors shift some of their money into the precious metal on expectations of more interest rate cuts in the United States, volatile stock markets and fears of rising energy costs.
"Everybody talks about $1,000. There's Japanese buying. It's cheaper for them to buy," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that investors may also book profits when gold eventually hit $1,000.
"We could see some selling but I don't think it will be aggressive. I don't know what the resistance level is but we can say $970 and $965 will be the support levels," he said.
Gold's inflation-adjusted record high was $2,119 an ounce at 2007 prices, according to analysts at metals consultancy GFMS Ltd. In the physical sector, dealers saw a surge in demand for gold bars from investors in Vietnam but holders in Indonesia and Thailand cashed in their bullion.
Gold's rise scared off jewellers in Hong Kong. The dollar extended falls on Monday and tumbled to a record low against a basket of currencies as worries about the health of US financial firms and fears of a US recession stoked expectations of aggressive rate cuts.
Lower interest rates lift gold's appeal as an alternative investment. "Sentiment is clearly bullish with weakness of the dollar prompting buying," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo. "Gold has more room to rise considering that its pace of rise has been slower relative to other commodities."
Crude oil held steady near $102 a barrel, supported by a falling US dollar and expectations that Opec would leave its output unchanged. "Demand from Vietnam is very good. I guess they are buying gold bars for investment and also a hedge against inflation.
They are quite bullish on the market," said a dealer in Singapore. A dealer in Hong Kong said: "I don't think there's physical buying here. The market is driven by funds and speculators." Silver rose as high as $20 an ounce, up from $19.80/19.85 an ounce late in New York.
Spot platinum firmed to $2,168/2,175 from $2,163/2,170 ounce late in New York. It hit a record of $2,192 an ounce on February 22 as problems with power supply disrupted mining in main producer South Africa. A South African minister said on Friday the country's mining industry would get priority under measures aimed at cutting electricity use to solve a power crisis.
Palladium rose to $578/583 an ounce from $563/568 an ounce late in New York within sight of last week's 6-1/2-year high of $582 an ounce. The most active February 2009 contract on the Tokyo Commodity Exchange fell 30 yen per gram lower to 7,021 yen.
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