Gold hit a record high at $1,167.45 an ounce on Monday as dollar weakness pushed the metal through key technical resistance levels, fuelling momentum buying after the metal's sharp run higher earlier this month.
Spot gold was bid at $1,165.45 an ounce at 1002 GMT (5:02 a.m. EST), against $1,148.20 late in New York on Friday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $19.10 to $1,165.90 an ounce.
Afshin Nabavi, head of trading at MKS Finance in Geneva, said the metal's rise through technical stops had triggered fresh buying.
The way the market held the $1,130 support on Thursday and Friday was very impressive, he said. It looks like $1,200 will be seen much sooner than expected.
The dollar extended broad losses on Monday, hitting a six-week low versus the yen after comments from a Federal Reserve official bolstered the view that U.S. interest rates will stay low.
Weakness in the U.S. unit boosts gold's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Oil prices rose more than 1 percent to top $78 a barrel, after the U.S. dollar lost its footing and heightened tensions between key oil exporter Iran and Western nations raised speculation of a potential supply threat.
Strong oil prices raise the metal's safe-haven appeal against inflation.
POISED FOR GAINS
Technical analysts at Barclays Capital -- who study past price charts to determine trends in future trade -- said in a note that gold was poised for further gains.
Gold has entered a seasonally bullish period... and is also performing well when priced in the other major currencies, the note said. Such a backdrop suggests higher prices (channel target at $1,175) into year-end.
Investment buying has also been encouraged by a spate of acquisitions of gold by central banks, most notably that of India, whose purchase of 200 tonnes of the precious metal from the International Monetary Fund was announced in early November.
Option traders are betting gold will hit $1,200 an ounce or higher by early next year, and strong options interest could in turn lift underlying prices further into uncharted territory.
On the physical side of the market, Indian gold buying cooled after picking up slightly last week as prices hit record highs and the flow of scrap eased, dealers said.
Buying is negligible compared to the regular daily volumes, said a dealer with a state-run bank in Mumbai.
Nabavi said some light physical demand had been seen out of Asia overnight.
Gold's gain lifted other precious metals, with platinum hitting its highest since September 2008 at $1,472.
Spot platinum was at $1,470 an ounce against $1,441, while palladium was at $369 against $361. Spot silver was bid at $18.81 an ounce against $18.46, having earlier hit a peak of $18.88, its strongest since July 2008.
ETF Securities said holdings of its platinum- and palladium-backed exchange-traded commodities rose to record highs on Friday.
(Additional reporting by Lewa Pardomuan; editing by William Hardy)