Spot gold rose $7.70 to settle at $527 an ounce on the New York Mercantile Exchange, after hitting a fresh 24-year high of $531 earlier Friday.
February gold, the most active gold contract, rose $7.50 to settle at $530.20 an ounce, after climbing as high as $534.30.
A number of traders had been targeting gold’s April 1981 high of $535, said Frank Lesh, futures analyst with Rand Financial Services.
"Specs are buying and funds are buying," he said. "People are long and happy about it. It’s just a continuation of the trend."
Meanwhile, spot silver rose 10.6 cents to settle at $9, and March silver, the most active silver contract, rose 10.5 cents to settle at $9.095 an ounce, after reaching a contract high of $9.14. Silver is trading at levels not seen since 1987.
Lesh said that while some traders have booked profits after the runup, others are using their profits to add to their long positions.
Gold has risen all seven business days of December. At the session high, the market was up $35.60, or 7 percent since its end-of-November price.
Worries about inflation have made their way into the marketplace, and these worries could send the metal considerably higher yet, said Peter Schiff, president of Euro Pacific Capital. In particular, Schiff pointed to increasing money supply from the Federal Reserve and other central banks around the world.
"That’s making money less valuable, and you can see the value of money declining relative to gold," he said. "Gold is how you measure paper currency. When gold is rising, it means currencies are losing value and purchasing power."
Due to its monetary use, gold moves on factors other than general supply and demand fundamentals, as is the case with commodities such as oil and soybeans, Schiff added.
"When gold is going up like this, that’s telling you something," he said. "It’s not just some other metal. Gold is being bought as money."
Peter Grandich, publisher of the Grandich Letter, commented that gold has been underpinned lately by investment and physical demand, as well as geopolitical concerns.
Meanwhile, there have been reports of a large short position, and these participants have been forced to cover, he said.
Gold could put in a short-term top, particularly since the market will slow around the holidays and end of the year, Grandich said.
"A retest to $500 to $510 would be nothing more than a very healthy correction and consolidation to take us into 2006," he said.
Lesh listed resistance for February gold around $535 and $550 and support at $515, $507 and $499.
Silver followed gold higher, also attracting fund buying. "It’s just participating in the party," said Lesh, who pegged resistance for March silver around $9.15 and $9.30 and support at $8.86, $8.75 and $8.62.
