COMEX gold rose to its highest in more than a month on Monday morning as investors jumped into safe havens after Israel killed the founder of Hamas and Palestinians vowed revenge.
The dollar succumbed to security concerns, but dealers said that the gold-dollar correlation was looser than usual.
"There have been a couple of funds that have been driving it higher," a vice president of precious metals at Mitsubishi International Corp of gold, James Pogoda said.
"The euro is really not running away though. So you've got to watch any rally here. It may be a bit overdone on the upside."
At 10:05 am EST (1505 GMT), April gold was up $5.50 at $418.20 an ounce, peaking at $419.00, its highest since January 15, off a low of $411.50.
Spot gold was quoted at $417.25/8.00, up from the close at $411.75/2.50 on Friday.
The London afternoon fix was $417.65.
Israel's assassination of Hamas leader Ahmed Yassin provoked Palestinian and Muslim fury, European condemnation and US denials that it approved the predawn missile attack on the wheelchair-bound cleric.
Gold has surged back in favour as portfolio insurance and a favourite of speculators in recent sessions.
It remains about $14 below the 15-year high of $432.30 hit on January 6. Speculators have more room to get long in gold again after reducing one of the largest COMEX positions ever as they drove prices down below $390 early this month.
The CFTC reported late Friday that the net speculative long position rose to 62,479 contracts as of last Tuesday from 60,539 lots the week before.
May silver continued to rally toward $8 an ounce it last saw in 1988. The contract was up 5.7 cents at $7.62, trading $7.765 to $7.515.
Spot silver was quoted at $7.58/60, up from the close at $7.54/57. The fix was $7.65.
Spot silver is nearing the $7.90 peak from 1998 after billionaire investor Warren Buffett bought 130 million ounces of the metal, creating a physical squeeze that put the forward market in deep backwardation. Spot prices were much higher than futures at the time, explaining why futures are at 16-year highs while silver bullion is only at a six-year high.
NYMEX April platinum was up $8 at $898.00 an ounce. Spot closed at $895.00/900.00.
June palladium was $4.10 higher at $282.10 an ounce. Spot was last priced at $279.00/284.00.
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