Gold and platinum hit all-time highs yesterday on dollar weakness, supply concerns, firm oil and expectations of more interest rate cuts in the US.
Spot gold hit an intraday high of US$914.50 an ounce (US$32.3 a gram), surpassing last week's record peak. Gold was last quoted at US$907.00/US$907.70 an ounce in New York on Thursday.
Platinum hit another record high of US$1,618.50 an ounce on investment demand, gains in gold and after Lonmin PLC slashed its sales outlook for the year. The metal was last quoted at US$1,606/US1,611 an ounce in New York.
The benchmark platinum future in Tokyo rose by its daily ¥120 limit to ¥5,350 a gram to track the cash market.
"Platinum is confronted by a big supply and demand problem. The price will be very strong in the future. Within a month, the next price target is US$1,650," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities.
Miners in South Africa, the world's largest platinum producer, have had to deal with electricity outages as power utilities struggled to keep up with rising demand.
Lonmin, the world's No.3 platinum producer, cut its sales outlook for the year after first-quarter refined platinum output slid by nearly a fifth because of safety shutdowns and persistent processing problems.
Sonoda said expectations of further US interest rates cuts, which have underpinned a recovery in stocks markets after a rout at the start of the week, have encouraged investors to buy commodities.
"That's a very good environment. By the end of June, gold will reach US$1,000," said Sonoda, who also expected more investors to shift to gold from government bonds.
Gold had tumbled to a three-week low of US$849.50 on Tuesday as falling energy and equity prices forced investors to sell the metal to cover margin calls, but the Dow Jones industrial average has since recorded two consecutive days of gains on hopes for interest rate cuts and a fiscal stimulus package.
Federal Reserve policymakers are scheduled to meet next Tuesday and Wednesday. A hefty emergency rate cut this week boosted sentiment in precious metals.
"After breaking the high, we may look at US$950," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
Hong Kong gold prices closed sharply higher yesterday at US$913/ US$913.50 an ounce, from Thursday's US$892.70/US$893.20.
The euro was steady around US$1.4760, bolstered by European Central Bank policymakers rejection of talks of lower interest rates on Thursday and restatement of an intent to control inflation risks.
Oil extended its rally toward US$90 a barrel after US lawmakers confirmed an economic stimulus plan that helped quell fears of a recession.