Gold prices edged down on Friday after reaching a 26-year high the previous day, as traders adjusted positions ahead of the weekend and as Tokyo futures prices came under pressure from a high yen.
However, there was plenty of bargain-hunting demand due to factors including lingering geopolitical concerns, worries over inflation and the recent weakness of the dollar, and analysts said the precious metal's sharp gains seemed unstoppable.
"I'm really speechless. It took two years for gold to rise from $400 to $500. It took nearly a half a year for it to rise from $500 to $600 and it only took less than a month to rise from $600 to $700," said Akira Doi, director at Daiichi Commodities.
"There are many bullish factors. All the factors have been the same for a while, but massive speculative funds have kept on flowing into gold. We all know that it's overdone but we don't know what can really stop this trend."
Doi was referring to gold's rise from $400 to $500 between November 2003 and November 2005. Gold broke through $600 on April 11 and it rose beyond $700 on Tuesday.
At 0634 GMT, spot gold was trading at $718.60/719.60 an ounce compared with $721.60/722.60 in late New York, where it had briefly reached $726 - the highest since January 1980. It had hit a record high of $850 during the same month in 1980.
Gold was under pressure on Friday as short-term fund operators and traders were keen to lock in profits after spot gold gained about 8 percent this week.
Gold has risen 40 percent this year and 70 percent in the past 12 months as investors diversify into precious metals as a hedge against global tensions, including those over US-Iran relations, high oil prices and dollar instability.
Bullion was also capped as yen-based Tokyo Commodity Exchange gold futures were pressured by the yen's climb to an eight-month high of around 109.94 to the dollar. A higher yen effectively lowers the value of yen-based gold. The benchmark most-distant April TOCOM contract closed at 2,578 yen per gram, up four yen from Thursday after moving in a range of 2,571 to 2,587 yen.
Platinum reached a fresh record high of $1,300 per ounce as active speculative buying in TOCOM platinum futures spilled over into dollar-based spot platinum.
Platinum was also buoyant amid speculation that Johnson Matthey, the world's top distributor of the metal, would produce a bullish report on the market next week.
"No matter how high platinum goes there is demand to buy it from end-users, especially from car makers," Daiichi's Doi said.
Platinum was trading at $1,291/1,296, down from $1,293/1,298 in New York. It was moving in a range of $1,295 to $1,300. Palladium was at $392/397 an ounce, slightly down from $395/400 in New York.
Silver fell to $14.83/14.93 an ounce from $14.94/15.04 in New York.