Spot gold surged 1.4 percent to score an all-time high for a third consecutive session on Monday, as nervous investors fled to the safety of the bullion amid fears of another U.S. recession and the euro zone's debt crisis.
Spot gold struck a record top above $1,878 an ounce, after staging its biggest weekly gain in 2-1/2 years last week. U.S. gold <GCcv1> jumped 1.6 percent to a record high of $1,881.9 earlier in the day.
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However, prices climbed down slightly later in the day as Asian stocks turned positive when some investors returned to pick bargains after the market posted its worst performance in two weeks last Friday.
By 0309 GMT, spot gold was up 0.6 percent at $1,869.49. U.S. gold <GCcv1> stood at $1,872.80, up 1.1 percent from previous close.
Persistent flow of weak macro data out of the United States and a complete lack of confidence in marginal economies of Europe have driven gold to consecutive record highs, said Tom Price, Global Commodity Analyst of UBS.
"We are not expecting anything supporting the U.S. economy or the macro data for at least a couple of months," said Price, "Europe we regard even weaker. We are thinking $1,900-$2,000 over the very short period of time is a likely target."
Investors are waiting for signs of further stimulus from the U.S. Federal Reserve when bankers gather in Jackson Hole, Wyoming, late this week, one year after Chairman Ben Bernanke launched a second round of quantitative easing to revive the economy.
Additional bond purchase by the Fed could raise inflation outlook and further boost gold, but many view the chances of a third round of quantitative easing limited and expect the Fed to take gradual measures to boost the economy.
Technical analysis suggested that gold could pierce through $1,900 over the day, said Reuters market analyst Wang Tao.
Holdings in the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose to 1,290.762 tonnes by Aug 21, highest in a week and half.
But speculators scaled back their bullish bets in U.S. gold futures and options for a second week last week, as bullion's rapid rally prompted some investors to liquidate positions, data showed.
"Key resistance in gold will be found at $1,946, however, the market may need an extraordinary event to take it above that level," said MF Global in a research note.
Other precious metals tracked gold's strength.
Spot silver rose as much as 2.5 percent to a three-month high of $43.93, extending a 10-percent rise last week -- its best week since December.
Spot platinum hit a three-year high of $1,887, on course for its 10th consecutive session of rise.
Precious metals prices 0309 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1869.49 10.60 +0.57 31.71 Spot Silver 43.32 0.46 +1.07 40.38 Spot Platinum 1882.24 11.29 +0.60 6.49 Spot Palladium 749.47 4.97 +0.67 -6.26 TOCOM Gold 4622.00 65.00 +1.43 23.95 114999 TOCOM Platinum 4684.00 80.00 +1.74 -0.26 9994 TOCOM Silver 106.50 5.70 +5.65 31.48 1169 TOCOM Palladium 1870.00 -6.00 -0.32 -10.82 448 COMEX GOLD DEC1 1872.80 20.60 +1.11 31.76 30812 COMEX SILVER SEP1 43.38 0.95 +2.23 40.21 7800 Euro/Dollar 1.4371 Dollar/Yen 76.74 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months