Spot gold prices surged up on Tuesday as it was supported by a weaker dollar and strong buying interest in Asia, while investors hoped for a further rally in prices next year.
Spot gold gained gained nearly one percent to $1,402.40 an ounce by 1352 GMT, jumping over $18 up.
The euro rose sharply as bears were forced to abandon their bets on Tuesday while the dollar came under broad selling pressure, hitting a three-week low against the yen and a seven-week low against the Australian dollar.
Gold is riding high on its own, but with the euro/dollar bid, it's even better, said a Singapore-based trader. Asians have been non-stop buyers, and want to load up when gold is some 40 bucks off the all-time highs.
Spot gold is biased to rise to $1,410 per ounce as an upward wave c is unfolding toward an eventual target at $1,430, said Wang Tao, a Reuters market analyst.
Traders and analysts expected the rally in gold prices to continue in 2011, after the bullion gained 27 percent this year, on course for its strongest year since 2007.
In the last week of the year we'll likely see gold range-bound between $1,375 and $1,400. Next year, we could see the gold rally continue, supported by factors such as the sovereign debt crisis in the euro zone, said Ong Yi Ling, an analyst at Phillip Futures.
Ong expected gold prices to rise to $1,550 or $1,600 in 2011.
Spot silver rose 0.6 percent to $29.43 an ounce, up 75 percent so far this year.
The gold-silver ratio, used to measure how many ounces of silver is used to buy an ounce of gold, dropped to 47.2, near its 46-month low of 47.1 hit last week.
The ratio has been on a steady decline since August this year, when silver started its spectacular rally. Spot prices had risen by 68 percent in the past five months, compared to a 19-percent ascent in gold over the same period.
We saw some selling in silver from the Chinese this morning when prices were on the rise, said a Singapore-based dealer, adding that silver premiums in Singapore stood at 40 to 70 cents per ounce above London prices.