A sickly dollar and firming oil prices swept gold to 28-year highs on Thursday, while platinum was set in London at a record high of $1,396 per ounce, aided by rising bullion prices and worries over supply.
Dealers and analysts said fund buyers, seeking safe stores for their cash due to continuing unease over problems in credit markets, had bit between their teeth and would eventually targeting a record high above $800.
"Gold is getting closer to the pivotal point at $750 per ounce, which it is likely to test in the short term if the stimulating impetus from the dollar and strong oil prices persists," said Alexander Zumpfe, trader at Heraeus. Spot gold rose as high as $749.30 an ounce - its highest since January 1980 - and was quoted at $748.70/749.40, up from $738.80/739.60 late in New York on Wednesday.
Platinum hit a record high of $1,396 an ounce before falling to $1,392/1,396, up from $1,381/1,388. Dealers cited worries over supply in South Africa due to power outages, and rising rates of interest charged on borrowing the metal.
South Africa's Anglo Platinum, the world's biggest producer, said that two of its smelters were affected by power outages. Analysts said the metal, used in auto catalytic converters and to make jewellery, were well positioned for further gains with support from the supply/demand outlook and fund interest.
"We continue to believe that platinum is a relatively safe place to hold precious metals exposure; any liquidation in gold will tug platinum lower but positioning is less extreme in platinum compared to gold and 'supply and demand' fundamentals superior," UBS said in a note to clients. The bank added however that current high price levels made it hard for potential investors to put on fresh long positions.
The dollar resumed its losing streak versus the euro and yen, with the greenback weighed by expectations for the US Federal Reserve to cut rates again after it slashed borrowing costs by 50 basis points in September.
"I expect to see a material correction sooner or later, but right now it looks more likely that we will surge through $750 first," said Tom Kendall, metals strategist at Mitsubishi Corporation in London.
"Any correction in gold is likely to be triggered by a turnaround in the forex market. Dollar shorts have held the upper hand for last few days, but this market is rather one-sided right now." Analysts saw a poor trajectory for the dollar benefiting gold further as a weak US currency makes gold and other dollar-priced metals cheaper for non-US investors.
Gold was also reaping benefits from rising oil that boosted its role as a hedge against oil-led inflation. Oil rose above $82 a barrel, within striking distance of an all-time high.
On the supply front, South African gold output fell 4.9 percent in volume terms and overall minerals production fell 3.1 percent in August compared with the same month the previous year, official data showed. In other bullion markets, Comex futures rose with the most active December contract at $755.2 an ounce, up $9.3 from the New York settlement. The benchmark August 2008 gold contract on the Tokyo Commodity Exchange finished up 14 yen or 0.5 percent at the day's peak of 2,836 yen, the highest for any TOCOM gold benchmark since March 1985.