Gold climbed above $900 an ounce to its strongest level in more than three months in Europe on Monday, lifted by interest in bullion as a haven from risk.
Spot gold was $905.90/907.90 an ounce at 1046 GMT, up from $898.10 in New York late on Friday. Earlier in the session the precious metal hit $907.40, its highest since Oct 10.
Gold priced in sterling hit a record 661.55 pounds, while euro-priced gold remained near the all-time high it hit on Friday, as fears over the global economic slowdown and volatility in other asset prices spurred buying.
RBS Global Banking & Markets' head of commodity strategy Nick Moore said factors including falling interest rates, the reinflation of Western economies and the prospect of lower supply both from mines and via central bank sales were supporting gold.
There is an insatiable thirst for gold at the moment, he said.
The dollar, whose strength usually weighs on gold, climbed to a six-week high against the euro on Monday, as investors worried about the outlook for the banking sector. [ID:nLQ139147]
However, other factors outweighed the dollar-euro exchange rate to support the precious metal. Demand for physical gold both from investors in smaller products such as coins and bars and from exchange-traded funds remains firm.
Investors were seeking the safety of physical bullion as other asset prices met fresh volatility, analysts said.
In times of economic crisis, falling equity markets and mounting aversion to risk, physical gold is preferred as the safest form of investment, Commerzbank analyst Eugen Weinberg said.
The world's largest gold-backed ETF, New York's SPDR Gold Trust GLD, which issues securities backed by physical stocks of the precious metal, said its holdings rose 1.6 percent to an all-time high of 832.57 tonnes on Friday. [ID:nT293191]
The trust's bullion holdings have climbed more than 52 tonnes or nearly 7 percent since the beginning of the year.
Japan's biggest bullion house Tanaka Kikinzoku said its gold coin sales more than doubled in 2008 as the global financial crisis unfolded. [ID:nT252802]
Asian precious metals trading is likely to be muted by the closure of the Shanghai Gold Exchange on Monday due to the Lunar New Year holiday.
On the supply side, AIM-listed gold miner Peter Hambro Mining (POG.L) said its 2008 attributable gold production was up 36 percent at 393,600 ounces, and that it expects its 2009 production to be 460,000-510,000 ounces. [ID:nWLA5793]
Among other precious metals, silver rose in line with gold to $12.03/12.11 an ounce from $11.92.
Platinum firmed to $965/970 an ounce from $955.50 an ounce in New York late on Friday.
We would not be surprised to see the gap between platinum and gold narrow: the ratio stands at about 1.07 at the time of writing and we have a standing recommendation to buy the platinum gold spread when the ratio falls below 1.05, UBS strategist John Reade said in a daily note.
We believe that in the long term platinum should trade at a considerable premium to gold and we observe that periods of platinum's discount to gold tend to be measured in days or weeks rather than months and years, he added.
Palladium eased to $191.50/196.50 an ounce from $195.00. (Editing by Sue Thomas)
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