Platinum struck a record for the second straight day on Tuesday, catching up with gold as a
weaker U.S. dollar and persistent supply problems in South Africa ignited buying from speculators and investors.
Platinum's gains pushed up sister palladium to a 6-1/2-year high. Gold was near an historical high hit the previous day and on track to touch $1,000 an ounce on expectations of further U.S. interest rate cuts and record high crude oil.
Spot platinum jumped to $2,243/2,250 an ounce, surpassing Monday's record of $2,230 an ounce. The metal was last quoted at $2,230/2,237 an ounce in New York.
"Platinum will be trying the $2,500-mark. It won't be surprising to see investors continue to buy platinum," said William Kwan, a dealer at Phillip Futures in Singapore.
Platinum, used in jewelry and auto catalysts to clean exhaust fumes, has risen more than 40 percent in 2008 as problems with power supply which disrupted mining in main producer South
Africa, triggered supply fears and sparked speculative buying.
The most active Tokyo platinum futures, currently February 2009, hit the daily 300 yen limit at 7,274 yen per gram before ending the morning session 299 yen higher at 7,273 yen.
Gold firmed to $985.70/986.50 an ounce from $981.20/982.00 late in New York, within sight of Monday's all-time high of $989.30 an ounce.
"Gold is being pushed up by the general bullish sentiment across commodities. All hedge funds are buying the market up. They are increasing their long positions," he said.
"There's a possibility before the FOMC, the market may price in an aggressive rate cut, and push up the price to above $1,000," said Kwan.
The U.S. Federal Reserve's Federal Open Market Committee holds a one-day meeting on interest rates on March 18. Short-term interest rate futures showed about a 75 percent perceived chance of the Fed lowering its benchmark overnight lending rate by 75 basis points at its next meeting.
In theory, lower interest rates elevate gold's appeal as an alternative investment.
The dollar hardly changed at 103.35 yen and was off a record low versus the euro, trading at $1.5200 .
"Prices beyond $1,000 seem inevitable, but beyond this psychological figure, price sustainability would be a key issue," said Pradeep Unni, an analyst at Vision Commodities in Dubai. "Retail demand has hit rock bottom and this is a bad signal for the long-term bull market. For the moment, immediate resistance is likely around $992 and $1,004," he said.
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange added $4.7 an ounce to $988.9 an ounce - off its record high of $992.00 hit Monday.
Spot palladium rose as high as $588 an ounce, its highest in more than six years, up from $576/580 late in New York.
Silver edged up to $20.36/20.41 an ounce from $20.27/20.32 an ounce, having reached a 27-year peak of $20.60 an ounce on Monday.