London: Gold surged to a historic high above $910 an ounce, as investors rushed in to buy the metal on further weakness in the dollar and expectations of a sharp cut in US interest rates, analysts said.
The gold rally also prompted buyers to snap up other precious metals, with platinum hitting a record high, silver prices touching a 27-year peak and palladium rising to its highest level in more than two months.
Gold's rapid advance with prices jumping 50 per cent in the past year, including a 15 percent rise in the last 30 days, made the metal vulnerable to sharp corrections but it had potential to gain further, analysts said.
"It's human nature to buy into a market that is already showing strength. Most fund managers have a herd mentality and they are just attracted to gains. Gold could go higher still, but we don't think this is a right time for buying," said Robin Bhar, metals analyst at UBS Investment Bank.
"From a technical perspective, we would obviously need to see a close above $900 that would be construed as a bullish sign. But fundamentally, we are very cautious and would not advocate going long here because positioning is still extreme. There is a risk of $50-$100 dollar correction at any time."
Spot gold jumped as high as $914 an ounce and was quoted at $9112.50/912.30 by 1130 GMT, against $895.70/896.50 in New York late on Friday.
US gold futures touched $915.90 an ounce, surpassing Friday's record high of $900.10. The most active February contract GCG8 was later quoted at $913.30, up $15.6 an ounce.
Japanese gold futures were closed for a holiday.
"There is blue sky ahead of us and there is room for gold to go higher. We are in an uncharted territory, really," said Darren Heathcote of Investec Australia in Sydney. "We have a weaker dollar and that's encouraged people to buy gold."
Dollar slide boosts gold
The dollar slid to 1-1/2 month low versus both the yen and the euro, with investor continuing to take a bearish stance on the US economy and expecting a sharp cut in interest rates this month to further erode the currency's appeal.
The Federal Reserve is widely seen cutting rates in January by a half-point to 3.75 per cent, and futures are pricing in the risk of a Fed rate cut even before its two-day meeting ending on Jan 30 in a bid to boost an ailing economy.
That would erode the dollar's yield appeal, bringing interest rates below those of the euro zone, where policymakers continue to sound a hawkish note on future monetary policy.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.
On charts, gold's 14-day relative strength indicator (RSI) rose to 89 from just 47 a month ago. The market views an RSI of 30 or less as oversold and 70 or more as overbought.
In Singapore, physical dealers noted selling from holders who cashed in on gold's gains as well as limited purchases from jewellers at lower levels.
Spot platinum hit record high of $1,587 an ounce before easing $1, against $1,562/1,566 in New York. Silver rallied to $16.58 an ounce before easing to $16.50/16.55, up from $16.19/16.24. Palladium rose $5 to $380/384.
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