Gold rose as much as 1% in Europe on Thursday as concerns over sovereign debt in some peripheral euro zone economies intensified, boosting interest in the precious metal as a safe store of value.
The markets are nervous over a meeting of Group of 20 leaders this week, at which currency imbalances may be addressed.
Worries over the stability of the foreign exchange markets has been a key support for gold this year.
Spot gold hit a high of $1 417,80 an ounce, near the record $1 424,10 an ounce it hit earlier this week, and was at $1 413,60 at 1213 GMT versus $1 402,70 late on Wednesday.
US gold futures for December delivery rose $14,40 to $1 413,70 an ounce.
Euro-priced gold also rose, reaching its highest since mid-June at €1 033 33 an ounce.
“The dollar is a tad firmer, but so are commodities in general,” said Saxo Bank general manager Ole Hansen. “We have not seen anything on the currency front yet that could rattle people’s belief in higher commodity prices.
“(There is) nervousness about the outcome of the G20 and the European debt situation,” he added.
“As we edge closer to the time of year where position reductions begins to kick in, I see the sector supported as long as we do not see sudden strength in the dollar.”
The dollar rose against the euro on Thursday, with tensions in the euro zone periphery expected to trigger further selling of the single currency as investors fretted over the outlook for the Irish and Portuguese deficits.
A stronger dollar usually weighs on gold, but risk aversion kept the metal supported. The cost of insuring Spanish, Portuguese and Irish debt against default hit record highs as market jitters over euro-peripheral economies rose.
“Worries over euro zone troubles were still mounting amid fears that Ireland will have to resort to a Greek-style bailout should the situation worsen,” said VTB Capital analyst Andrey Kryuchenkov in a note.
“A stronger dollar is still capping the upside in gold, but should risk sentiment turn outright sour, gold would decouple from the rest of the precious complex with investors running for bullion’s safety amid rising currency and sovereign risks.”
In Asia, traditionally a key region for gold consumption, gold scrap selling increased after spot prices hit record highs, though it fell short of meeting burgeoning demand.
“The collection of scrap has definitely increased compared to last week, but not enough to fulfill fresh demand in the market,” said a dealer with Mumbai’s Jugraj Kantilal & Co.
Among other precious metals, silver rose to $27,70 an ounce against $27,20. Holdings of the iShares Silver Trust, the world’s largest silver exchange-traded fund, rose 3,4% to a record 10 718,82 tons by November 10, it said.
“At 40,6 million ounces over the past five business days, global ETF investment enjoyed its largest absolute one-week increase since the first week of the first-ever contact (iShares) in April 2006,” said UBS analyst Edel Tully in a note.