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The precious metal, which is used in used for jewelry and auto-catalysts, has surged to new heights for the last 14 trading sessions and is currently trading 40 percent higher than at the start of 2007 on worries about a widening market deficit.

"Again, the recent surges have pushed the metal deeper into overbought territory," said James Moore, an analyst at TheBullionDesk.com, in a note.

He added that "with no end in sight to the supply woes it seems the only way is up, with any dips being viewed as buying opportunities."

Also on Nymex, March palladium rallied $47.60, or over 10 percent, to finish at $499.30 an ounce. Earlier, the palladium contract hit an intraday high of $502 an ounce.

Silver futures for March delivery rose 39 cents, or 2.3 percent, to $17.508 an ounce, making it the highest close since December 1980. The metal has increased 17 percent this year.