Gold prices jumped nearly 1.5 percent and silver streaked toward a 30-year record early on Tuesday, as thin volume and bullish hopes for next year drove bullion above $1,400 an ounce for the first time in two weeks. "There's a little year-end rush to see if we can post some high numbers to mark the books against," said Fred Schoenstein, a trader at Heraeus Precious Metals Management in New York. "Volumes are very low so it doesn't take a lot to push it."
After several weeks of trendless trade, gold staged its biggest one-day gain since December 3 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.
After modest early gains, spot gold shot more than $20 an ounce higher in early US trade, hitting a session peak of $1,406.15, the highest since December 14. It was up 1.5 percent at $1,405.05 by 11:40 am EST (1640 GMT). US gold futures for February delivery rose 1.6 percent, or $22.60, to $1,405.50. Trading volume picked up from Monday's lacklustre activity, with over 85,000 lots already traded, about one-half the norm. But volumes were still subdued by the UK holiday and lack of official gold fixings.
Silver led the rally as it has for the past few months, with traders rushing to clambor on board one of the best-performing commodities this year. After pacing gold earlier, spot silver shot ahead by midday, jumping 2.8 percent to $30.08 an ounce, nearing the 30-year high of $30.68 touched on December 7. Prices have surged nearly 79 percent this year versus gold's 28 percent rise.
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 46.7, 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.