Gold extended its record-breaking rally to a second day on Thursday as the dollar fell to a 2010 low against a basket of major currencies, prompting investors to buy the metal as a hedge against currency depreciation. Silver hit a 30-year peak to rise above $24 an ounce.
The Reuters/Jefferies CRB index - a barometer for commodities - posted further gains a day after rising above 300 points for the first time in two years, driven by a steadily falling dollar. "It just doesn't seem to matter too much anymore. Dollar up, dollar down ... Investors are choosing precious metals as a safe haven just because they are the only show in town right now," Michael Daly, gold specialist at Chicago-based futures broker PFGBest. Gold prices have risen more than 25 percent this year as the dollar has been battered by expectations that US policymakers will pursue an increasingly loose monetary policy and resume buying government debt to stimulate economic growth.
Spot gold hit a high of $1,387.10 an ounce and was up 0.3 percent at $1,375 an ounce at 12:02 pm EDT (1602 GMT). US December gold futures climbed $5.80 to $1,376.30. Silver prices also rode higher on gold's coattails, setting a 30-year high at $24.90 an ounce, and was trading up 2 percent at $24.37.
The US dollar index, which measures the dollar's performance against a basket of six major currencies, fell to its lowest level this year. The Australian dollar flirted with parity as selling in the greenback spread after Singapore widened its currency trading band.
Standard Chartered analyst Daniel Smith said dollar weakness had been a major driver of the recent run higher in gold. "Although QE expectations are an important element of the rally, currency disputes are also a prime driver of gold prices," said James Steel, chief commodity analyst at HSBC.
Among other precious metals, palladium rallied to a fresh nine-year high at $603 an ounce, lifted by strength in gold, dollar weakness and an improving auto demand. Palladium was further trading up 1.5 percent at $599, while platinum gained 0.3 percent at $1,707 an ounce.
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