Fears the US economy could slide into a recession after a recent spate of poor data and Europe's debt crisis fueled gold's surge to a 10th record high this month and analysts predict bullion could hit $2,000 soon, given the strong momentum.
"We are not expecting anything supporting the US economy or the macro data for at least a couple of months. Europe we regard even weaker," said Tom Price, global commodity analyst at UBS.
"We are thinking $1,900-$2,000 over the very short period of time is a likely target."
Spot gold jumped more than 1 percent to an all-time above $1,878 an ounce, before trimming gains to $1,870.49 by 0222 GMT. So far this month, bullion is up about 15 percent, its best showing since September 1999.
All eyes are on Federal Reserve Chairman Ben Bernanke's speech on Friday at an annual central bank conference in Jackson Hole, Wyoming, where investors would be looking for hints of stimulus measures after Bernanke acknowledges the slow pace of growth of the world's top economy.
Cleveland Federal Reserve Bank President Sandra Pianalto said on Friday the US economy is growing so slowly that it will take years to bring the unemployment rate down from above 9 percent to the more normal 5-1/2 percent.
"We're not forecasting another recession in the US but there's no doubt that the risks to the downside have strengthened over the past few months," said Ben Westmore, commodity economist at National Australia Bank.
"A lot of the participants in the gold market seem to think that the US weakness is likely here to stay."
Brent oil fell $2 to as low as $106.62 a barrel as Libyan rebels entered the capital Tripoli with little sign of resistance from forces loyal to Gaddafi in the Libyan leader's last remaining stronghold in the North African nation.
Rebels hope to resume oil output, disrupted by the six-month civil war, to ease fuel shortages and potentially restore some supply to global markets.
OPEC member Libya is the world's 17th-largest oil producer and Africa's third-largest and holds the continent's largest crude oil reserves.
US crude gained 65 cents to $82.91 a barrel.
Copper rose 0.6 percent to $8,875.25 a tonne, regaining some ground after falling for a third week in a row last week, on hopes of firm Chinese demand and supply risks.
The labor union at the world's No. 3 copper mine, Chile's Collahuasi, last week threatened to stage a one-day stoppage on Sept. 2 if the mine's operator does not hire back workers fired after a previous disruption.
Supply issues also supported grain prices, with Chicago wheat rising 1.1 percent to $7.69-3/4 a bushel, and corn gaining 0.8 percent to $7.31, on production and yield quality worries.
Supplies of US high-protein spring wheat have been tight for months, and the 2011 harvest that traders hoped would replenish grain bins is running a few weeks later than normal after widespread planting delays.
Copyright Reuters, 2011