Gold is now on course for a 15 percent
gain in 2010, fueled largely by investor nervousness that stemmed from the
fallout from the eurozone debt crisis and from economic data that has suggested
global economic growth may be losing momentum.
Spot gold was at $1,267.70 an ounce by
1500 GMT, up from $1,245.25 the day before, having hit a record high of
$1,271.20 earlier in the session. US gold futures for December delivery were
last up $22.4 an ounce at $1,269.40.
"It's continuing the trends that
we've seen through this year really. Equity markets just remain very, very
lacking in confidence, no one is prepared to put positions on and stick with
them for any length of time," said Credit Suisse precious metals
strategist Tom Kendall.
"There is a lot of volatility and
reaction to data ... people are looking for that defensive asset." Gold
has long served investors as an alternative to volatile currencies, equities or
sovereign bonds that investors will swiftly punish.
This year has seen an expansion in open
interest in US gold futures and hefty flows into exchange-traded products
backed by physical bullion and even if the economic data improves, some
analysts believe gold has room to rally.
"The funds are certainly doing some
buying ... who else is it going to be? It's not producers buying it back, it's
investors. And investors, whether rightly or wrongly, believe in this and that
is the message," said ANZ head of sales Peter Hillyard.
"It's going up for all the same
reasons. People are fearful still. Little things come into the market, little
factors that awaken people's interest in gold," he said.
The euro rose against the dollar after
breaking through a key area of resistance, while US Treasury prices rallied,
brushing off a report that showed sturdy consumer spending in August, but was
not enough to shift investors' expectations for a slowdown and lower bond
yields.
Gold is on track for a 15 percent rise
this year, fueled primarily by investors seeking an alternative to volatile
currencies, equities and some sovereign bonds as economic data has cast doubt
on the global growth outlook.
"All four precious metals are
really keeping a very close eye on the US dollar right now and if the dollar
doesn't 'shape up' as such, this safe-haven buying will continue in the
precious metals," said Afshin Nabavi, head of trading at MKS Finance.
Although the gold price has held within
a few dollars of record highs for a few weeks, the market is now in the full
throes of the buying season in some of the world's biggest consumers, who seem
undeterred by the price strength.
Across the rest of the precious metals
complex, silver traded at its highest in 2-1/2 years, helped by robust Chinese
industrial output and firm base metals, although the safe-haven effect boosting
gold was also a driving force.
Spot silver was last at $20.43 an ounce,
up from $20.02 the day before and on course for its third consecutive day of
gains.
In the platinum group metals, platinum
leapt to its highest level since early August, just below $1,590 an ounce, to
be last quoted at $1,582.00, against $1,543.65 on Monday.
Palladium hit its highest in four
months, trading above $550 an ounce.
Palladium, which is predominantly used
in the production of auto catalysts, is on track for a 33 percent increase this
year and is one of the top performers of the commodities complex.
Palladium was last at $548.00 up from
$524.95 on Monday, set for its biggest daily rally since late May.
