US gold futures surged above the historic $1,000 mark on Thursday, as a record-low dollar and inflation fears due to crude oil rising to all-time highs prompted investors to enter the bullion market.
Fund managers and gold experts said they expect bullion could rise to further records as more and more investors turned to gold as an alternative investment, even though the metal could retreat due to profit taking in the short run.
"It's psychological and I view this by no means as a significant barrier to gold. And I think the market is going to continue to work its way higher," said Bill O'Neill, managing partner of Logic Advisors in Upper Saddle River, New Jersey.
"I don't think the mentality relative to the credit crisis will be changing for a while. I can't predict the end of it, but we're not finished here, it's going to drive gold to $1,100 in my view."
At 10:26 am EDT (1426 GMT), the active gold contract for April delivery on the Comex division of the New York Mercantile Exchange was up $17.60 or 1.8 percent at $998.10 an ounce. It traded between a bottom of $982.70 overnight and a record high of $1,001.
The dollar plunged below 100 yen for the first time in over a decade and hit a record low versus the euro as worries deepened on Wall Street that the United States had entered a recession.
Returns on US holdings are eroding for foreign investors and many see precious metals as hard assets that can protect portfolios. "Well, tell me what the dollar is doing to do and I'll tell you what gold will do. To the extent that the dollar continues to weaken, we would expect to seng analyst at HSBC in New York.
Market-watchers also said that the Federal Reserve's resolve to cut interest rates to boost the ailing US economy will be supportive to gold. "The Federal Reserve is going to cut and inflate our way out of this credit mess and the implications are going to be higher and sustained inflation, and that's been signalled by not just gold but by virtually every commodity and the dollar," said Michael Darda, chief economist of MKM Partners LLC in Greenwich, Connecticut.
Spot gold was quoted at $996.60/997.50, up from $981.90/982.70 at the close Wednesday. London bullion dealers fixed the afternoon spot price at $988.25 an ounce.
Comex's May silver jumped 84.0 cents, or 1.2 percent, to $20.835 an ounce. It traded between a bottom of $20.180 and a high of $20.980. Spot silver jumped to $20.71/20.76 from $20.04/20.09 at Wednesday's close. London silver was fixed at $20.79.
The active Nymex platinum contract for April delivery rose $32.00 or 1.6 percent to 2,102.00 an ounce. Spot platinum fetched $2,098/2,108. Nymex June palladium climbed $2.80 to $513.70 an ounce. Spot palladium was at $506/511.
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