Gold Hits Record Highs on Surging Oil Prices

"The metal could not wish for a stronger motivation than the powerful brew of nearly $100 per barrel crude oil and the potential for further troubles in Pakistan," said Jon Nadler, an analyst at Kitco Bullion Dealers, in a research note.

Gold for February delivery surged $8.70 at $868.70 an ounce on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $872. The record high for Nymex gold futures was $875, set on January 21, 1980.

Gold futures gained $22 to close at $860 during Wednesday's trading, while crude oil soared to historic highs of $100 a barrel the government reported U.S. crude inventories dropped more than previously expected. Crude peaked at $100.05 a barrel during intraday trading.

In Pakistan, rising tensions prevail after the assassination of former Prime Minister Benazir Bhutto last week which made investors weary of where they place their investments in, and opting for the safety of gold. Analysts are uncertain of how long gold will continue to be the safer asset to invest in.

"However, as conditions have blossomed into overbought status in a swift fashion, there is no telling where the next turn is and/or what lies around the corner," Nadler said. "That caution is well-advised should go without saying."