The spot price of gold set a fresh record above $1,500 U.S. and spot silver traded at a fresh 31-year high.
Standard & Poor's warning Monday that the U.S. government's triple-A credit rating was on watch for a possible downgrade continued to drive gold and silver momentum Wednesday, as investors sought a store of value amid economic uncertainty.
Concerns over rising inflation in China, heightened by another increase in the reserve requirement set by the country's central bank over the weekend, and ongoing fear over the ability of Europe's weaker economies to handle high levels of sovereign debt also proved supportive.
Ahead of the New York day, gold was up $9.30, or 0.6%, to trade at $1,504 U.S. a troy ounce. Spot silver leapt 79 cents, or 1.2%, to $44.75 U.S.
Gold may now come against some resistance, said traders and analysts.
Traders also warned that clusters of options -- which give a seller the right to buy or sell at a certain price -- around $1,500 U.S. an ounce could keep a lid on prices if investors decide to take the opportunity to cash in on gold's rally. While put options—the right to sell -- could be followed through, call options -- the right to buy -- could be sold in an attempt to avoid paying out for gold at such a high price, the trader said.
Platinum and palladium were also higher Wednesday, following the fortunes of the base metals complex, which drew strength from buoyant equity markets on the back of strong corporate earnings in the U.S. and strong economic data releases.
Spot platinum was up $22, or 1.2%, at $1,789 U.S. an ounce, while spot palladium rose $26, or 3.6%, at $757 U.S. an ounce.
