Gold climbed to its highest in three weeks and silver rose toward a 30-year high on Wednesday, as thin volume and a weaker dollar drove bullion to within $20 of its record. Gold buying was boosted as the dollar fell against the yen, euro and some commodity-driven currencies such as the Australian and New Zealand dollars.
Precious metals extended gains from the previous session, when bullion jumped over 1.5 percent on doubts over US economic recovery. "Volume is light and somebody's making a decision on whether to own some gold or to cover some short positions at the end of the year. It can change in any given time during the day," said George Nickas at futures broker FC Stone.
After several weeks of trendless trade, gold staged its biggest two-day gain since December 6 as many investors bet that economic uncertainty and currency diversity would fuel more demand from investors and banks. Prices are on track to rise 28 percent this year, a record 10th consecutive annual gain.
Spot gold rose 0.4 percent to $1,411.49 an ounce by 12 pm EST (1700 GMT), having earlier setting a three-week high of $1,412.65. US gold futures for February delivery were up $6.60 an ounce at $1,412.20. Silver led the rally again as it has for the past few months, after setting a three-week high of $30.64 an ounce.
Spot silver rose 1.2 percent to $30.61, driven by a broad push higher across the commodities complex, with copper at record highs and crude oil steadying above $91 a barrel. The gold-silver ratio, used to measure how many ounces of silver is used to buy an ounce of gold, slumped to a new 46-month low of 46.1, extending its steady decline since August. It has averaged about 63 over the past year, and dropped below 45 only twice in the past 25 years.
Silver is one of the best-performing commodities so far this year, gaining over 80 percent. Palladium hit fresh nine-year highs, driven by expectations for robust demand next year. Spot palladium reached a session peak of $793.50, its highest since March 2001. It gained 0.9 percent to $792 an ounce. Platinum eased 0.3 percent at $1,748.70, but still near its seven-week highs.
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