Gold hit a record high for a second straight session on Wednesday, powered by investor demand for safe-haven assets and a slide in the dollar in anticipation of a euro zone rate hike, while silver hit fresh 31-year peaks.
Unrest across the Arab world and unease over the euro zone's debt finances have also encouraged inflows of cash into gold, which has risen by more than 2 percent this week.
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Spot gold hit a record $1,460.60 an ounce and was bid at $1,458.50 an ounce at 1256 GMT, against $1,450.60 late in New York on Tuesday. U.S. gold futures for June delivery rose $7.30 an ounce to $1,459.80.
"We have been seeing frenzied buying as markets scythed through the all-time high levels," said Pradeep Unni, senior analyst at Richcomm Global Services. "Fundamentals are still bullish, with geopolitical instability supporting the markets substantially."
Oil prices were near 2-1/2 year highs as unrest continued across the Middle East and North Africa, keeping gold well-bid. Investors were also nervous over euro zone debt, becoming increasingly convinced Lisbon will have to seek a bailout.
The focus this week is on Thursday's three central bank policy meetings, at which the European Central Bank is seen almost certain to raise rates, while the Bank of Japan and the Bank of England are expected to hold their fire.
The euro hit its strongest in over a year versus the dollar in anticipation of an ECB rate hike. While hikes usually pressure non-interest bearing assets like gold, pressure on the dollar resulting from the move is expected to outweigh that.
"It is unquestionable that the demand for precious metals derives from the devaluation of the leading currencies -- the dollar, the pound and the euro," said Angelos Damaskos, a fund manager at Sector Investment Managers."Investors are looking for an alternative store of value."NO CHANGE FROM THE FEDThe minutes from the U.S. Federal Reserve's most recent meeting, released on Tuesday, did not contain anything to suggest the central bank would end its $600 billion bond buying programme ahead of time, which some had mooted.
Record-high food prices and rising oil prices have stoked inflationary pressures around the world, adding to the case for owning gold, which can help mitigate the impact of rising price pressures on an investment portfolio.
The world's central banks are tackling inflation by tightening monetary policy -- a potential negative to gold, which bears no yield.
But most benchmark interest rates, when adjusted for inflation, will remain in negative territory, including those in China, which raised rates on Tuesday for the fourth time since October.
Reflecting the pick-up in investor demand for gold was the first inflow of metal into the SPDR Gold Trust, the world's largest exchange-traded fund, since March 16.
Holdings of silver in the world's largest ETF, the iShares Silver Trust are at a record 11,162.45 tonnes, having risen by more than 240 tonnes so far this year.
Silver has reaped the benefits of investor demand for safe-haven assets and protection from inflation and on Wednesday rose to its highest level since January 1980.
Spot silver was last at $39.51 an ounce, having risen earlier by as much as 0.8 percent to $39.54. Spot platinum was last up 1.4 percent at $1,810 an ounce, while palladium was up 0.9 percent at $793.31.