Gold closed at a record high Friday for a second straight session, as momentum triggered by buying of the metal as a haven from sovereign and financial risk pushed prices through technical resistance and above their previous peak.
Spot gold was last bidding around $1,258.80 an ounce midday Friday, against $1,243.40 late on Thursday. U.S. gold futures for August delivery settled at $1,258.30, a new record high.
The precious metal has risen nearly 15 percent since the end of 2009, fueled by sovereign risk in the euro zone, historically low interest rates, and concern over the stability of paper currencies.
"Sovereign debt worries, central banks raising their holdings and record low interest rates keep attracting new buyers to gold," said Saxo Bank senior manager Ole Hansen. "The Goldilocks scenario continues. Risk-off helps gold through safe haven (buying), risk-on helps it as well through a weaker dollar."
The dollar fell to three-week lows against the euro on Friday, and a one-month low versus the Swiss franc, pressured by disappointing U.S. data, which helped push U.S. Treasury yields to their lowest in a week.
Growth concerns also pressured industrial commodities, with oil prices falling more than $1 per barrel on Friday on signs economic expansion in the world's top two oil consumers may not be as rapid as expected, while base metals declined.
Interest in gold improved, however, as the U.S. data raised concerns about the pace of economic recovery. Lingering fears over European sovereign debt levels are also burnishing the metal's safe-haven appeal.
"We expect gold to continue to perform well given continued fiscal/debt challenges in Europe and the potential for this to spread to other regions," Deutsche Bank said in a note.
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, hit record highs Friday morning as investors continued to turn to physical bullion as a haven from risk.
Silver tracked gold higher to a four-week peak of $18.97 an ounce against $18.67, slightly outperforming the yellow metal, and was last around $18.70.
The gold-to-silver ratio fell to its lowest since late May on a day-to-day basis, with one ounce of gold now buying 66.4 ounces of silver.
The silver market, smaller and more illiquid than gold, tends to outperform the yellow metal when prices are rising.
"If both gold and silver continue to improve, we expect silver to outperform, thus moving the gold-silver ratio lower," said ScotiaMocatta in a note.
Among other precious metals, platinum was around $1,574 an ounce against $1,574, while palladium was neared $480.50 against $479.50.
The world's biggest palladium producer, Norilsk Nickel, said it had received an offer for some of its Australian assets, and that it planned to proceed with plans to divest them.
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