Bullish sentiment sent US gold futures higher early on Friday, extending the previous session's gains on inflation fears as crude oil again hit record highs and as the dollar continued to slump against the euro.
Jonathan Jossen, an independent trader, said from the Comex floor in New York that sellers were largely absent in the market on Friday as investors were afraid to miss out on gold's next rally and charts suggested prices could go higher.
At 10:32 am EDT (1432 GMT), most-active December gold on the Comex division of the New York Mercantile Exchange was up $2.30 at $742.20 an ounce, dealing between $740 and $747.10 which marked the loftiest level since 1980.
Gold futures already surpassed Thursday's session high of $746.50 and have surged nearly $30 this week, thanks to the Federal Reserve's half-percentage-point rate cut and a sharp drop in the dollar.
On Friday, The dollar fell slightly against the euro after the greenback tumbled 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.
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.
US crude was up about 20 cents at just below $82 a barrel in early trading, boosted by supply concern after companies shut output in the Gulf of Mexico because of a storm threat. 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.
Spot gold surged to a fresh 28-year high on Friday. Gold rose as high as $739, its loftiest level since January 1980 when it hit a record high of $850. Spot bullion was quoted at $733.85/734.55 versus $734.20/735.00 in New York late Thursday. The London morning gold fix was set at $735.35.
Comex December silver was up 13 cents, or 1 percent, at $13.60 an ounce, trading between $13.48 and $13.80. Spot silver traded at $13.44/13.49 an ounce compared with $13.36/13.41 late Thursday. London silver was fixed at $13.47 per ounce.
NYMEX October platinum rose $9.9 to $1,338.50 an ounce. Spot platinum was quoted at $1,331/1,335 December palladium edged up 75 cents to $344.85 an ounce. Spot palladium was at $338.50/341.50.