Gold soared to a record high on Wednesday as a weakening dollar, falling returns on U.S. bonds and a break above historic resistance at $2,000 an ounce added momentum to buying by investors seeking a safe store of value.
As the COVID-19 pandemic has roiled markets, gold has gained nearly 35% this year and is one of 2020's best performing assets.
Investors fear economic stimulus unleashed in response to the pandemic will trigger inflation, devaluing other assets, and keeping bond yields historically low, which enhances the appeal of non-yielding gold.
Breaking above $2,000 for the first time on Tuesday and hitting a new high of $2,044.34 an ounce earlier on Wednesday, spot gold was up 1.1% at $2,041.09 by 1337 GMT.
U.S. gold futures climbed 1.7% to $2,055.30.
"There's a level of fear in the markets which is almost palpable," said independent analyst Ross Norman.
"Momentum is feeding on itself, based upon real concerns about the failure of the macro economy to show any meaningful signs of recovery."
Silver prices also jumped 4.2% to $27.10, the highest since April 2013. Silver, which is both a safe-haven asset and widely used in industry, has risen over 51% this year, outperforming even gold.
Inflation-adjusted U.S. 10-year yields have fallen to below minus 1% from 0.15% at the start of this year.
The dollar has also fallen to multi-year lows, making gold cheaper for buyers holding other currencies and denting the appeal of an asset that competes with gold as a safe haven. It fell again on Wednesday as Washington remained deadlocked over a relief package.
Many analysts think gold will rally further, with Bank of America saying it could reach $3,000 over the next 18 months.
"The only thing I can think of that would take the wind out of its sails would be a viable and easily distributable vaccine for the virus," said StoneX analyst Rhona O'Connell, though she said gold's journey higher could be volatile.
Many analysts say gold's rally has been so fast a short-term fall in prices and period of consolidation is likely.
Elsewhere, platinum rose 2.3% to $959.01 and palladium was 1.3% higher at $2,168.04.
(Reporting by Arpan Varghese in Bengaluru, Peter Hobson in London; editing by Kirsten Donovan and Barbara Lewis) ((firstname.lastname@example.org; +91-80-6182-2823 / 3590 (If within U.S. call 651-848-5832 ); Reuters Messaging: email@example.com))