US gold futures settled at a 24-1/2 year high on Thursday, gaining after wave of profit taking evaporated and speculators rekindled an ongoing rally by adding to their massive long position, dealers said.
At the New York Mercantile Exchange's Comex division, February delivery gold rose $4.90 to close at $522.70 an ounce, after moving from $515.80 to $523.90 the highest benchmark gold futures price since April 1981.
Traders and money managers have been piling into gold amid expectations for further price gains, as well as uncertain outlooks for US inflation and world politics. Some currency traders also have been fleeing weakness in the Japanese yen by selling it and buying the precious metals in recent days, which has helped fuel gold's meteoric rise.
Other metals are well bid too, with platinum near a 26-year peak above $1,000 an ounce and silver pushing new 18-year highs at $9 an ounce. "The commodities in general are the flavour of the month. It is just speculative froth, but don't think that it could end soon," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
"It is money chasing money in gold, and nobody wants to be short because it's going up every single day. "I think $550-$560 could be the next target," Kaplan said. Analysts see gold as having room to stretch higher, but many also feel that a sell-off could take place, due to the hefty fund long position, if there is a change in momentum or sentiment.
The record high for gold futures, hit in January 1980 after the oil shock and recession of the 1970s, was $873. Traders pegged first resistance at the technical level of $525, followed by the more psychological level of $550.
Support rests down at $500 and $497, they said. Citicorp said it remained positive on gold. Healthy underlying supply/demand fundamentals like Indian fabrication, Chinese retail investment and recycled petrodollars from the Middle East were setting the stage for more macro/monetary catalysts to enter the market, it said.
"We expect gold prices to work higher (but) a seasonal correction in the first quarter would not be a surprise," Citicorp said in a report. Bullion touched another in a series of 24-1/2 year highs on Thursday, at $519.80.
Spot gold was worth $519.50/520.30 an ounce, against $513.90/514.70 at Wednesday's New York close. On Thursday's afternoon fix in London was $515.70. Comex March silver rose 11.3 cents to $8.99 an ounce, in a range of $8.785 to $9.00 a high not seen since May 1987.
Spot silver fetched $8.88/91 from $8.77/80 in New York previously. The fix was at $8.79. Nymex January platinum gained $8.80 to $1,007.10 an ounce. On Tuesday's high of $1,015 was the metal's best price since March 1980.
Spot platinum was holding at $998/1,003. Thinly traded March palladium rose $6.20 to $288.15 an ounce. The day's peak of $288.50 was a 19-month high. Spot palladium fetched $278/282.