A weaker dollar and firmer oil prices kept up a blistering rally in precious metals prices on Wednesday, pushing gold and silver to 25- and 23-year highs respectively and lifting platinum to a new record peak.
The rally has been driven by inflation worries, political tensions in the Middle East and instability in currency markets, and dealers saw nothing to suggest the trend could be reversed in the near term.
"Oil has been a key driver because it's a big part of the commodity baskets like Goldman Sachs index. Oil is making these baskets perform, which is making people buy the baskets," said Jon Bergtheil, global metals strategist at J.P. Morgan.
Spot gold spiked to $629 an ounce, the highest since December 1980, before easing to $627.70/628.50 by 1501 GMT, still sharply up from $620.20/621.00 late on Tuesday in New York.
Gold's latest rise has been mainly sparked by Iran's dispute with the West over its nuclear aims, which is also the major factor driving oil above $72 a barrel.
A weaker US dollar, which hit a seven-month low against the euro, was also contributing to interest in gold.
"It's a sentiment-driven market," MKS Finance analyst Frederic Panizzutti said, adding that the market had become "over-bullish".
Gold rose in other currencies too, with prices per ounce jumping to a record high of 597.89 euros and hitting a two-decade high of 351.69 sterling.
Precious metals have soared in the past year and outpaced other assets, with silver gaining 103 percent, gold 47 percent and platinum 30 percent.
In the past 12 months, the Standard and Poor's 500 index, an indicator of US equity performance, rose about 14 percent, while the Dow Jones industrial average gained 12 percent. The dollar against the euro was up by 5 percent.
Traders and analysts were fully expecting more gains for bullion. Gold peaked at $850 an ounce in 1980, when Middle East issues were also an important price driver.
"Further strength in the metals appears likely," said John Reade, analyst at UBS Investment Bank.
Simon Weeks, director of precious metals at ScotiaMocatta, said there were very few sellers around. "The upside is still vulnerable...gold could get to $640."
SILVER SPIKES, EYES $15: Silver gathered momentum from the bullion rally and on speculation that a proposed exchange-traded fund would boost physical demand.
Spot silver rose to $14.50/53 an ounce, just off a new 23-year high of $14.53 and versus $13.91/13.94 in the US market.
Platinum hit a new record at $1,121 an ounce before inching down to $1,117/1,122, up from New York's $1,111/1,116.
In industry news, the world's third-biggest platinum producer Lonmin Plc said it expected to restart its biggest furnace this week after closing earlier this month due to a leak.
Palladium rose to $371 an ounce, the highest since August 2002, but later dropped to $365/370.
In other markets, base metals hit new highs as benchmark London Metal Exchange copper futures crossed $6,500 a tonne in Asian morning trade and zinc and aluminium futures surged upwards.