Investors clamouring for safe places to put their money sent gold futures to a record high and silver to a fresh 31-year peak today.
Picture: AFP
A man pours molten gold to make a 6.5 kilogram bar of gold.
The precious metals were shining in their roles as havens as euro-zone debt worries resurfaced, increasing the hand wringing among market participants already jittery about $US106 oil, fighting in Libya and the nuclear crisis in Japan.
"The safe-haven mentality is growing," said George Gero, vice-president with RBC Capital Markets Global Futures.
"This is a global fear of inflation and upheaval."
The most-actively traded gold contract, for April delivery, gained $US10.40, or 0.7 per cent, to settle at a record $US1438 a troy ounce on the Comex division of the New York Mercantile Exchange.
"It would be hard to imagine a more bullish scenario for gold and silver given the real macroeconomic and geopolitical uncertainty and risk in the world today," a note from Dublin-based bullion dealer GoldCore said.
Comex March silver added US93.1 cents, or 2.6 per cent, to settle at $US37.202 an ounce, the highest finish for a nearby contract since February 13, 1980.
The gains in precious metals came as peripheral euro-zone bond markets were under pressure and the euro was showing strain amid worries over Ireland's banking sector and concerns over the outcome of Portugal's vote on austerity measures.
Meantime, German Chancellor Angela Merkel's Christian Democratic Union faced election defeat this weekend, and she is expected to toughen her stance on weaker euro members.
Gold is often considered a refuge in times of economic uncertainty because it isn't widely used in manufacturing like industrial commodities. Equities were under pressure as oil prices climbed above $US106 a barrel as the conflict in Libya and unrest elsewhere in the region kept concerns about supply disruptions alive.
Investors worry high crude prices will temper the global economic recovery. Rising oil prices could also lead to inflation, against which gold is also considered a hedge.
"It means you're going to be spending a lot more on all products that use petroleum," Mr Gero said.
Crude prices rose as the US and its allies continued to pound forces loyal to Colonel Muammar Gaddafi in Libya, where 1.3 million barrels a day of oil exports have been sealed off by the fighting and Western sanctions.
The aftermath of the Japanese earthquake and the situation at the crippled Fukushima Daiichi nuclear plant also continued to worry investors amid reports of higher-than-allowed levels of radioactive iodine in Tokyo drinking water.
Data that showed new homes in the US plunged last month to a new record low also undermined market confidence, helping the precious metals.
Sales sank 16.9 per cent from a month earlier to a seasonally adjusted annual rate of 250,000 in February, the Commerce Department said.
"Investors are looking at (gold) as a flight-to-quality trade," said Bob Haberkorn, senior market strategist with Lind-Waldock in Chicago.
Other precious metals also gained. Nymex April platinum rose 1.2 per cent while June palladium on the exchange gained 1.6 per cent.
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