Gold powered through the $1,000 per ounce psychological barrier on Tuesday, carried by a wave of pent-up technical momentum and dollar weakness, with some analysts eyeing last year's record high at $1,030.80.
Some investors were also seeing the spike in gold as a warning signal to stock market bulls and were fretting about the result of central banks and governments pumping billions of dollars into banking systems to boost growth.
Spot gold rose to $1,007.45 an ounce, its highest since March 2008, when bullion touched the $1,030.80 record. It was trading at $1,001.75 an ounce by 1442 GMT (10:42 a.m. EDT), after briefly dipping below $1,000, and versus $993.85 an ounce late in New York on Monday.
U.S. gold futures for December delivery rose to $1,009.4 an ounce, before easing to $1,006.80 an ounce, versus Friday's close at $996.70 an ounce before the U.S. long weekend.
Gold's probably the most technically traded financial instrument in the world, analyst David Thurtell at Citigroup in London.
Where can it go? If it closes through $1,010 and plus tonight, you'd have to think there would be a lot of very nervous shorts around that are getting close to covering, and then it really could pop and go up another $50 quite quickly,
For a technical story on gold, see and for a snap analysis on gold's price prospects, see
But the sustainability of the precious metal's rally above $1,000 an ounce, which also helped boost palladium and silver to 2009 highs, was in question.
UBS analyst John Reade said in a note to clients that gold options had moved sharply after breaking through $1,000.
Today's move in implied volatility suggests...that a scramble for upside gold options could lead the spot gold price higher, he said.
We are unconvinced that all the ingredients are in place for a sustained surge higher in gold, he added.
Implied volatility is a measure of demand for options, which investors use to take advantage of, or protect themselves against, sharp movements in spot rates.
Spot gold has now made three attempts to rise and stay above $1,000, including Tuesday's push. The market stayed above the key level for one day in February this year and three days in record-setting March 2008.
Despite gold hitting $1,000, it is far from an inflation-adjusted record, which analysts at GFMS have put as high as $2,079 per ounce.
Some analysts have said the higher gold price reflects uncertainty across markets about how central banks will untangle themselves from fiscal stimulus aimed at reviving economic growth, as well as dollar weakness.
Gold is celebrating because the day when inflation might return is getting sooner rather than later, Ashok Shah, chief investment officer at London and Capital.
As long as the authorities are intent on not reversing their policies then gold will remain in demand and it will be wanted.
Investment action took a break, with holdings in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, standing at 1,077.63 tonnes as of September 7, unchanged from Friday, denting the price prospects for gold.
We are still skeptical that this is a sustainable rally, said Andrey Kryuchenkov, an analyst at VTB Capital.
There is very little reason to be long gold, with already record spec long positions accumulated in the market.
In other metals, silver hit a 13-month high of $16.81 an ounce and was at $16.69 an ounce versus $16.29 an ounce. Palladium touched $296.50 an ounce, its highest since September last year. It was last at $294.00 an ounce versus Monday's $291.50.
Platinum was at $1,283.50 an ounce versus $1,255.00 an ounce on Monday.
(Additional reporting by Chikako Mogi in Tokyo; editing by Keiron Henderson)