Gold powered to a new high around $973 an ounce on Friday after crude oil set an all-time high of above $103 a barrel, igniting another round of buying from investors and speculators.
Palladium jumped to its best level in more than six years, silver held near a 27-year high struck on Thursday but platinum slipped in the absence of new developments in South Africa's supply problems.
Gold jumped as high as $973.10 an ounce, up from $968.90/969.70 late in New York on Thursday. Gold has gained more than 16 percent this year, with the upside target pegged by dealers at $1,000 an ounce.
Record high oil and expectations of more interest rates cuts in the United States add to inflation pressures, elevating gold's appeal as a hedge against inflation, while volatile stock markets have encouraged investors to shift some of their money into gold and other precious metals.
"The target is $1,000. I personally hope it will be $1,000 within a month," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, adding that gold was likely be driven by movements in oil in coming weeks.
Crude oil rallied to another record above $103 a barrel as Ecuador shut a key export pipeline and a fire hit a major European natural gas plant.
While oil is at a record price in inflation-adjusted as well as nominal terms, gold is far from an inflation-adjusted record, which analyst GFMS has put as high as $2,079 an ounce.
"Most of the funds are buying inflation hedges such as gold, silver and oil. It's still a bull market, where hedge funds and banks buy precious metals," said William Kwan, a dealer at Phillip Futures in Singapore. "I think inflation is really getting out of hand. I am looking at $955 for support and resistance at $985," said Kwan, who pegged upside target for silver at $20.
Silver edged up to $19.76/19.81 an ounce from $19.74/19.79 an ounce, having reached a 27-year peak of $19.83 an ounce on Thursday.
The dollar tumbled to a three-year low versus the yen and held near record troughs against other currencies after Federal Reserve chief Ben Bernanke warned some small U.S. banks could
fail, suggesting that interest rates may fall more.
Spot platinum fell to $2,105/2,112 from $2,135/2,140 an ounce late in New York and off last week's record high of $2,192 an ounce.
Automakers, who had bought the metal on fears of further price hike and mining disruptions in South Africa, were on the sidelines, waiting for more corrections, said Sonoda of Daiichi Commodities. "Car makers are waiting for the price to decrease to $2,000," he said.
Platinum, used in jewelry and auto catalysts, has jumped more than 40 percent this year after mines in South Africa, accounting for 80 percent of world output, were shut for five days at the height of last month's power crisis.
The most active February 2009 contract on the Tokyo Commodity Exchange ended the morning session 162 yen per gram lower at 6,855 yen, also hit by a firm yen against the dollar.
Palladium hit a high of $575 an ounce, its best level in more than six years, up from $560.00/564.00 late in New York.