Gold has been unstoppable since August, rising from $930 per ounce to hit another record high today at $1,216.75 an ounce during the European trading session. The metal also reached all-time highs in euro, sterling and yen denominations, indicating broad independent strength. U.S. February gold futures also hit a record at $1,218.40 an ounce on COMEX. Investors keep speculating on rising prices, due primarily to expectations of continued dollar weakness and more buying by central banks.

The dollar inched up slightly against the euro today, but with U.S. interest rates likely to remain at record lows for quite some time and risk appetite seemingly on the rise, the fate of the USD continues to look grim, attracting more and more investors into higher yielding investments, including gold. Gold is particularly attractive, because it is not only a higher yielding investment, it is also an enticing alternative safe haven to the dollar. The fact that stock markets are performing better and we have weakness in the U.S. dollar are supportive for precious metals, and from that perspective I believe this rally remains sustainable, said a prominent banking analyst.

Investment in gold companies is on the rise, with the world's largest gold-backed exchange-traded fund, the SPDR, increasing its holdings by 0.61 tons to 1,130.604 tons on Tuesday. The holdings are approaching a record of 1,134.03 tons made in June.

Traders said options-related activity was also boosting gold prices.  Increased trading activity occurs when Gold passes key strike prices, such as $1,200, causing a flurry of volatility. Yesterday, there was a struggle at around the $1,200 level, but now that this level has been broken, there is increased speculation that the price will now push up towards $1,250.

Gold demand in India decreased on Wednesday as prices propelled higher. India's purchase of 200 tons of gold caused a 13 percent price rally late last year. India was the world's largest bullion market last year, however an apparent lull in Indian buying is apparently being offset by rising speculative buying.

Many speculators are counting on further buying by central banks, particularly in Asia, after many years of net sales in gold. Other speculation fueling the frenzy is that China, which has the world's largest foreign exchange reserve of $2.27 trillion, will boost gold reserves, which are currently mostly held in U.S. Treasury bonds.

As long as the dollar is depressed and all of the bullish speculation is unfettered, it seems that there is no discernible limit to how far gold may climb.