NEW YORK -- Gold futures have extended record highs above $1,150 an ounce Wednesday as the dollar dips and the metal's alternative currency sheen brightens.
While much of the recent buying has been from short-term investors speculating that the metal will continue to rise in price, there are signs of support for the market from physical buying despite lackluster jewelry demand from India, the world's largest market.
In recent trading, December gold was up $9.40 at $1,148.80 an ounce after reaching a most-active record of $1,151. Thinly traded nearby November gold was up $8.40 at $1,147.20 after reaching a front-month record of $1,148 in electronic activity before New York floor trading opened.
More
Copper, Gold Lead Metals' Rise
Commodities En Vogue for Fund Managers
"Although down from recent highs, we still see net physical buying," said Standard Bank analyst Walter de Wet. "We believe buying momentum will remain positive for most of (the fourth quarter) on high seasonal demand."
As a result, Mr. de Wet said he believes "the current gold rally still has some legs irrespective of high investment demand."
Physical gold buying tends to pick up toward the end of the year amid festivals in India, Christmas in other parts of the world and ahead of the Lunar New Year. This year high prices and a weak monsoon season have damped buying in India.
In addition to seasonal buying of jewelry, the continually higher gold prices are boosting coin and bar sales.
Meanwhile, "investor demand for gold remains robust," said Barclays Capital analyst Natalya Naqvi, noting that total holdings across 16 major gold exchange-traded funds rose by 1.2 metric tons Tuesday.
Investors are flocking to gold as they flee the dollar and put the money into hard assets, equities and higher yielding currencies. Some are concerned about currency debasement stemming from government debt. Some also see inflation emerging longer term as a result of accommodative government monetary policy and are buying the metal as a hedge against rising prices.
Wednesday morning data showed that U.S. consumer prices continued to rise modestly in October, indicating the slow economic recovery is containing inflation. The 0.3% gain was slightly more than the 0.2% increase economists were expecting.
