Gold prices hit a record high in choppy trade on Tuesday, and silver, platinum, palladium and rhodium rallied to multi-month peaks, as the dollar's slide to its lowest level since August 2008 against the euro fueled buying of precious metals.
Gold later retreated but stayed higher as the dollar clawed back some lost ground against the euro, but it held near $1,060 an ounce as fears lingered over the outlook for the U.S. currency.
Spot gold scaled an all-time high at $1,068.30 an ounce, and was at $1,063.80 an ounce at 2:01 p.m. EDT, against $1,055.25 late in New York on Monday. It has rallied 12 percent since the beginning of September on a steadily falling dollar.
The trend in the dollar is lower, and that is going to be the main focus, said Tom Hartmann, a commodity analyst at California-based Altavest Worldwide Trading. The outlook for the dollar will be predicated on the Fed (U.S. Federal Reserve), for one, hiking interest rates. But it doesn't look like that is going to happen any time soon.
The dollar slipped against the euro and fell to a 14-month low against a basket of currencies as investors refocused on the outlook for U.S. interest rates.
Hartmann said it would be the second quarter of next year before it is imaginable that any size (interest) hike will take place.
Most-active December gold futures settled up $7.50 at $1,065 an ounce on the COMEX division of the New York Mercantile Exchange.
Currency and equity traders were awaiting the release of earnings results of key U.S. companies later in the week for clues to the future direction of trade.
Oil also rose above $74 a barrel, near its 2009 high. Strength in crude often benefits gold, because it boosts interest in commodities as an asset class and the precious metal can be bought as a hedge against oil-led inflation.
Gold bulls were also taking heart from a pick-up in buying of gold jewelry in India, the world's largest bullion consumer last year, after an extremely sluggish year.
TARGETS NEW PEAKS
From a technical perspective, Commerzbank analysts pinpointed key resistance for gold around $1,066 an ounce. A failure to breach that level could push it back to its previous record high above $1,030 and from there to $1,000, they said.
Gold's rally also lifted the price of other precious metals.
Silver rose above $18 an ounce for the first time since July 2008, reaching a peak of $18.01. It was last at $17.70, versus a late Monday New York quote of $17.68.
Citigroup said in a research note it expects silver to average $16.00 an ounce in 2009 and $17.40 next year.
Platinum hit a 13-month high of $1,361.50, and palladium rose to a 13-1/2-month peak of $333 an ounce. Platinum was later at $1,353 an ounce, versus $1,336.50 late on Monday, and palladium was at $325.50, versus $325.50.
Rhodium, a platinum group metal, rose to $1,700 an ounce on Tuesday, having risen $100 an ounce in the past two sessions.
(Additional reporting by Veronica Brown in London; Editing by Walter Bagley)