Gold hit a record high at $1,216.75 an ounce in Europe on Wednesday as investors bet on higher prices, with funds lengthening positions on expectations for a fresh leg of dollar weakness and more central bank buying.
The metal also reached all-time peaks in euro and sterling terms and a historic peak when priced in the Japanese yen, according to Reuters data, indicating independent gold strength.
Spot gold was bid at $1,214.75 an ounce at 1530 GMT, against $1,196.00 late in New York on Tuesday. U.S. gold futures also hit a record $1,218.40 an ounce.
Not to be outshone, platinum shot to its highest since August 2008 at $1,506 per ounce. Silver and palladium hit their highest levels since July last year.
Although the dollar held a firmer tone against the euro, fund managers and analysts said low U.S. interest rates plus fiscal and monetary stimulus would keep the dollar on the back foot and gold well supported.
The fact that the dollar has been able to hold around $1.50 against the euro...gives people a reasonable expectation that the dollar is now going to start an attack on the downside toward $1.60, said Lars Steffensen, managing director of Essex-based Ebullio Capital Management.
There's a lot of passive investment, long-only money coming in every month, and this is a continuation of the pattern we've seen every month this year, he added.
Investment interest in gold remained firm, with holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, rising to 1,130.604 tonnes on Tuesday, near the record 1,134.03 tonnes they hit in June.
Gold also hit historic highs in sterling terms and when priced in the euro and yen.
Click here for a graphic on gold in different currencies: http://graphics.thomsonreuters.com/129/GLD_CURR1209.gif.
Traders said options-related activity was also lifting gold toward fresh peaks.
At these levels the option strikes are the main focus, said Simon Weeks, head of precious metals at the Bank of Nova Scotia. Yesterday there was a struggle around $1,200, and now that we are above there, there will be an increasing pull toward $1,250.
In the physical market, the flow of scrap gold re-entering the Indian market -- which usually increases when prices rise -- tailed off as sellers sought still higher prices, dealers said.
Gold demand in India cooled on Wednesday as prices jumped to record highs. Separately, data showed Turkey imported 393 kg of gold in November, up from 15 kg a year before but down from 4,209 kg in October.
While physical demand in many traditionally key gold buying countries has been soft, a dip in such buying is being easily offset by rising speculative interest.
Speculators are betting on further buying by central banks, particularly in Asia, after many years of net official sector sales. India's purchase of 200 tonnes of gold, announced in November, sparked a 13 percent prices rally that month.
The move strengthened speculation that other emerging country central banks will follow suit.
We believe that a key fundamental supporting factor for gold is the continuing shift of central banks and governments from being net sellers of gold to net buyers, said Daniel Sacks, portfolio manager of the Investec Global Gold Fund.
The gold bull market of the 1970s was in part ushered in by central bank hoarding of gold, he said. With central banks likely to be net gold purchasers this year for the first time since 1988, a similar scenario appears to be taking shape.
Strength in gold has lifted other precious metals. Silver and palladium rallied to their strongest levels since July 2008. Spot silver was later bid at $19.36 an ounce against $19.07, and palladium at $386.50 against $380.
Spot platinum rose as high as $1,506.00 an ounce, its highest since August last year. It was later at $1,494 an ounce against $1,478.50.
For graphic of gold's inflation-adjusted high, click on: http://graphics.thomsonreuters.com/129/GLD_PRCINF1209.gif.
(Editing by Keiron Henderson)