Gold rose to a one-month high on Friday, boosted by dollar weakness, stronger oil prices and worries over geopolitical risks in Pakistan and northern Iraq. The dollar extended earlier losses against the euro - making dollar-priced gold cheaper for non-US buyers - after data showed a nine percent decline in new US home sales last month, adding to concern about US economic health heading into the new year.
Platinum steadied near record highs after falling earlier in the day. The metal has surged about 40 percent so far this year. Spot gold traded up to $836.90 an ounce, its highest since November 26, and was quoted at $836.40/837.10 by 11613 GMT, against $824.70/825.50 late in New York on Thursday.
Gold, traditionally seen as a safe-haven asset, jumped on Thursday after a suicide bomber killed Pakistani opposition leader Benazir Bhutto. "With the dollar under pressure and violent protests seen in Pakistan, it is likely that gold could see further safe-haven investment demand, and potentially rise to challenge this year's high," said James Moore, metals analyst at TheBullionDesk.com.
The metal rose to a 28-year high above $845 in November, just shy of its historic high of $850 on a tumbling dollar and firm oil prices. Gold has gained 31 percent so far this year. Gold's role as a hedge against oil-led inflation was also highlighted as crude firmed almost $1 to rise above $97 a barrel, within sight of its record high.
"Gold has started to spike up and most factors are turning in favour of gold. If the momentum sustains, gold may reach new highs early next year and crude oil prices may add fuel to the rally," said Pradeep Unni, analyst at Vision Commodities.
In other bullion markets, US gold futures rose, with the February contract up $8.40 at $840.10 from the New York settlement. The benchmark December 2008 contract in Tokyo closed at 3,060 yen a gram, up 8 yen.
In industry news, the Shanghai Futures Exchange, one of China's three commodities futures bourses, plans to launch trade in the country's first gold futures on January 9, sources close to the exchange said.
Platinum fell as low as $1,527 an ounce before rising to $1,535/1,536, the level at which it closed on Thursday when prices rose to a record high at $1,542. The metal has gained sharply this year on positive fundamentals, with concerns over physical supplies.
Supply disruptions at some mines in South Africa, the world's top producer, have resulted in a shortage this year and are likely to leave the market in deficit again next year. Palladium was up $1 at $363/367 an ounce, while silver rose to $14.72/14.77 an ounce from $14.58/14.63.