Gold prices hit new record highs on Thursday, fueled by dollar weakness as hopes of more monetary easing by the U.S. Federal Reserve continued to run high, aided by Singapore’s move to let its currency appreciate.
Silver rose to a fresh 30-year top at $24.38 an ounce, and palladium hit $603, its highest in more than nine years, as the sinking dollar unleashed a broad rally in commodities.
The dollar marked a 10-month low against a basket of currencies, coming under broad selling pressure after Singapore widened the trading band of the Singapore dollar, letting its currency hit a new record high.
“It’s the old story — the talk on the U.S. stimulus package, and too much hot money around. What should you do? There is practically no interest rate, so everyone is rushing into commodities and the stock market,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers Ltd in Hong Kong.
“Until the interest rates turn around, we won’t see a sharp drop in prices. For the short term, gold is still bullish. We’ll reach $1,400 sooner than we expected.”
Spot gold rose to an all-time high around $1,380 an ounce and was at $1,379.90 by 0036 GMT, up $9 from New York’s notional close.
U.S. gold futures for December delivery also hit a new record high around $1,381 an ounce.
Buying interest in gold rebounded from a dip at the end of last week. The Relative Strength Index, or RSI, rose to a one-week high of 80.9, suggesting an overbought market.
But holdings in the SPDR Gold Trust (GLD.P) slipped more than two tonnes to 1,285.200 tonnes by Oct 13, their lowest in more than two months.
Holdings in the iShares Silver Trust rose to a new record high of 10,125.17 tonnes.
Gold is expected to rally toward $1,404 per ounce as it has climbed above a consolidation range between $1,324.85 and $1,364, said Wang Tao, a Reuters market analyst.
The physical market is seen holding off on action after the rapid ascent of prices.
“Prices have risen too fast today. Selling is not aggressive, as people bet on further price rise. Buying is more cautious at this level,” said Leung of Lee Cheong.
In China, record high prices may curb demand for jewelry, but investment needs are seen rising with prices, traders said.
Spot platinum was the only metal in the complex to shy away from record levels, up 0.63 percent to $1,713 an ounce.