Spot gold climbed more than one percent to a record high above $1,920 on Tuesday, as concerns about a worsening euro zone debt crisis and stalled global growth drove investors out of from riskier assets to safe havens, including gold.
It was the 12th record high that spot gold has reached since the beginning of August, and the rally is expected to continue, with investors unable to see a quick resolution to the euro zone crisis and the global economy at risk of slipping into another recession.
Investors are watching a string of legal and political events in Europe this week that could hurt efforts to resolve the debt crisis, after dispute broke between international lenders and Greece over disappointment that Athens had fallen behind schedule on cutting deficit.
Spot gold stood at $1,919.49 an ounce by 0605 GMT (2:05 a.m. ET), and has risen about 18 percent since the beginning of August. It is up 35 percent on the year so far.
U.S. gold rallied 2.5 percent to a record high of $1,923.2, and eased slightly to $1,922.50.
After we broke above $1,900 people are now looking at $2,000 as the next target, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Fung said physical demand from India and China, the world's top two gold consumers, remained strong despite lofty prices, and helped keep gold premiums in Hong Kong in the range of $1 to $1.50 an ounce over spot prices.
Financial markets will also closely follow the U.S. ISM non-manufacturing index for August due later in the day.
If we get a negative reading, it will just reinforce concerns about a global recession and possibility of some form of stimulus from the Fed (U.S. Federal Reserve) down the road, said Ong Yi Ling, an analyst at Phillip Futures.
As long as gold holds above $1,700, the bullish trend will persist and prices could hit $2,000 by the end of the year, she added.
India, the world's largest gold consumer, sees its festival and wedding season start later this month. Strong demand has defied record high prices, traders said.
The platinum-gold spread dipped to a discount of more than $20, headed for a third consecutive session in negative territory. The last time the spread was in discount for a prolonged period was 1985.
Spot platinum rose to a two-week high of $1,889, before easing to $1,891.99.
(Editing by Clarence Fernandez)