US gold futures jumped more than 2 percent early on Thursday, adding to the previous session's gains, as the dollar sank to an all-time low against the euro and crude oil again rallied to record highs. Yet, investors should be cautious as weakness in technical charts could suggest profit taking in gold futures after this week's sharp rally, a dealer said.
"The dollar's weakness is inherent in gold's strength, always. That's all that matters," the dealer, Carlos Perez-Santalla of Hudson River Futures, said. At 10:44 am EDT (1444 GMT), most-active December gold on the Comex division of the New York Mercantile Exchange was up $15.60 or 2.1 percent at $745.10 an ounce, dealing between $728.90 and $746.40 which marked a fresh 28-year high. Spot gold prices Thursday surged to a 28-year high in European trade.
Gold rose as high as $738.10, which was its loftiest since January 1980 when it hit a record high of $850. Spot bullion was quoted at $736.50/737.30 versus $721.10/721.90 in New York late Wednesday. The London morning gold fix was set at $727.15. The dollar sank below $1.40 per euro for the first time on Thursday, weighed down by a hefty US interest rate cut this week and expectations of more moves to come.
Dollar weakness intensified in continued reaction to comments from Saudi Arabia's Central Bank Governor Hamad Saud al-Sayyari who told Reuters on Wednesday that the bank would hold back from matching a US interest rate cut.
Analysts said that inflation worries could boost gold after the Federal Reserve's aggressive rate cut and as crude oil prices were hovering near record highs this week. Gold is usually seen as a hedge against inflation.
However, George Nickas of FC Stone in New York said investors should use caution as gold futures were trading at record-high levels. "If the majority of the people are chartists, they are going to be cautious at these levels, because the relative strength index is indicating that the market might be temporarily overbought," Nickas said.
Meanwhile, bullion used to back StreetTRACKS Gold Shares, the world's largest gold ETF by far, rose to a record 577.1 tonnes, about 60 tonnes above the level by the end of August.
Comex December silver was up 45 cents or 3.5 percent at $13.560 an ounce, trading between $13.035 and $13.600. Spot silver traded at $13.40/13.45 an ounce compared with $12.95/13.00 late Wednesday. London silver was fixed at $13.17 per ounce.
NYMEX October platinum was up $18 or 1.4 percent at $1,326.50 an ounce. Spot platinum was quoted at $1,321/1,325. December palladium gained $3.50 or 1 percent to $340 an ounce. Spot palladium was at $334/338.