US gold futures slipped from a record high just shy of $900 an ounce early on Wednesday as investors kept buying and strong demand at the debut of China's first gold futures contract underscored global bullishness.
Gold's rally comes in the context of explosive fund interest in the commodity sector since the beginning of 2008. Platinum also hit a new high overnight before backing off.
Despite the mild correction as New York traders sat down, upward momentum appeared strong with sentiment underpinned by record oil prices, a weak dollar and the flight from US equity markets into hard assets. Building on Tuesday's more than $18 gain, gold for February delivery at the Comex division of the New York Mercantile Exchange rose to $894.40 in electronic trade overnight, more than $10 higher than the previous day's record and up $28.70 on the week.
At 9:21 am EST (1421 GMT), the active contract was off 10 cents at $880.20 an ounce, still well above the day's low of $873.80. "Probably you can look at some of the index fund allocation as a partial driver the last couple of days," said a futures broker. "After a crazy day yesterday, everything seems to have come to a screeching halt. So I guess some of that money is not flowing in, at this point."
The market gained momentum after the key Japanese gold futures price hit its highest level since March 1984 and gold futures were launched on the Shanghai exchange.
Spot gold fetched $875.40/6.10 an ounce, off from Tuesday's New York close of $878.10/878.90. London bullion dealers fixed the morning spot reference price at $887.85. Comex March silver was off 10.5 cents at $15.71 an ounce, trading from a two-month high of $16.27 to $15.645. Spot silver was at $15.58/63, off from $15.70/15.75 late Tuesday. London silver was fixed at $16.00.
April platinum backed off a contract high of $1,569.5 an ounce. It as down $3.50 at $1,557.00. Spot platinum was quoted at $1,553/$1,557. March palladium had drooped $4.10 to $377.70 an ounce and spot palladium fetched $373/$377.