Gold hit a record high at $1,167.45 an ounce yesterday as dollar weakness pushed the metal through key technical resistance levels, fuelling momentum buying after the metal's sharp run higher earlier this month.
Spot gold was bid at $1,165.45 an ounce at 1002 GMT, against $1,148.20 late in New York on Friday.
US gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose $19.10 to $1,165.90 an ounce. Afshin Nabavi, head of trading at MKS Finance in Geneva, said the metal's rise through technical stops had triggered fresh buying.
"The way the market held the $1,130 support on Thursday and Friday was very impressive," he said.
"It looks like $1,200 will be seen much sooner than expected," said Nabavi.
The dollar extended broad losses yesterday, hitting a six-week low versus the yen after comments from a Federal Reserve official bolstered the view that United States interest rates will stay low for the time being.
Weakness in the US unit boosts gold's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Technical analysts at Barclays Capital – who study past price charts to determine trends in future trade – said in a note that gold was poised for further gains.
"Gold has entered a seasonally bullish period... and is also performing well when priced in the other major currencies," the note said.
"Such a backdrop suggests higher prices (channel target at $1,175) into year-end."
Investment buying has also been encouraged by a spate of acquisitions of gold by central banks, most notably that of India, whose purchase of 200 tonnes of the precious metal from the International Monetary Fund was announced in early November.
Option traders are betting gold will hit $1,200 an ounce or higher by early next year, and strong options interest could in turn lift underlying prices further into uncharted territory.
