US benchmark gold futures surged to a 17-year high on Thursday morning, then edged back a bit, as concerns about inflation and US economic growth attracted safe-haven and fund buying in the precious metal.
The rally came as the gold market was in the rare position of breaking from its close inverse relationship with the dollar, which climbed against the euro on Thursday.
December delivery gold on the New York Mercantile Exchange's COMEX division was trading at $457.30 an ounce, up $3.60, or 0.8 percent, at 10:22 am EDT (1422 GMT).
Traders said the contract bolted to $459 at the opening bell on aggressive fund buying. That was the highest price for a most-actively traded futures month since June 1988.
The move lifted gold past first chart resistance at the $458.70 mark, set in December 2004 by the then-benchmark COMEX February gold contract.
Gold, which is often viewed as an inflation hedge by investors, has been bolstered recently by near record-high crude oil and gasoline prices as well as worries about US economic growth after Hurricane Katrina, analysts said.
COMEX gold in June 1988 rose as high as $470 an ounce, as the market was gradually declining from its all-time high of $870 hit in January 1980.
Bullion hit a 2005 high at $455.10 an ounce. Spot gold changed hands at $453.30/454.00, up from Wednesday's late quote in New York at $449.50/450.20. Thursday's afternoon London fix was at $454.80.
"Gold now needs to build on this break to avoid profit taking from speculative longs, but the likelihood of a break above $457 (in spot), which would set a new multi-year high, looks very strong indeed," James Moore, analyst at TheBullionDesk.com, said.
A New York trader said that, with prices easily moved in thin trading volumes, some players appeared to be buying gold before US second-quarter current account data is issued on Friday, which could affect financial markets in general.
Major resistance in the current December contract looms up at last year's 16-year high of $471 an ounce.
COMEX December silver rose 2.5 cents to $7.07 an ounce, dealing from $7.045 to $7.14. Spot silver fetched $7.00/7.03, versus $6.98/7.01 previously. It fixed at $7.0275.
NYMEX October platinum soared to a one-month high at $922.90 an ounce, up $5.40. Spot platinum was worth $916/920.
Lightly-traded December palladium climbed $2.95 to $187.70. Spot palladium was quoted at $183/187.