NEW YORK — Gold prices surged above $1,400 an ounce Tuesday as a weaker dollar pushed investors into the safe haven of precious metals.
Gold also seems to be gaining value based on its own track record for 2010, when global economic instability made it the go-to investment for jittery traders.
"Still looking for ONE good reason for" the price increase, analyst Jon Nadler wrote in a note to clients Tuesday. "No trader can own up to one."
Nadler, a senior analyst with Kitco Metals Inc., said gold's upward momentum seems to be one of the key drivers in its continued rise, creating a kind of casino-like environment where traders snap up contracts in anticipation that others will as well.
"In so many words, it is rising because it HAS risen already. Stack the chips," Nadler wrote.
Still, there are fundamentals supporting gold's rise, said George Gero, senior vice president for RBC Wealth Management. Precious metals are a classic hedge against inflation. Traders are speculating that more central banks will take action to stimulate their economies in 2011, which could lead to inflation and make gold even more attractive than it is now.
Gold for February delivery rose $22.70 to settle at $1,405.60 an ounce. Silver followed in its wake, with contracts for March delivery rising $1.068 to $30.323 an ounce.
Industrial metals were also up. Copper for March delivery rose 4.8 cents to settle at $4.3280 a pound.
December palladium gained $20to settle at $787.20 an ounce and December platinum gained $16.20 to close at $1,751.70 an ounce.
Oil prices remained above $91 a barrel on light trading on expectations that economic growth during 2011 could stoke energy demand.
Several large investment banks have predicted that oil will hit $100 next year as China, India and other emerging economies compete with developed countries and tighten the world's oil supply.
Benchmark oil for January delivery rose 49 cents to settle at $91.49 a barrel on the New York Mercantile Exchange.
In other Nymex trading in January contracts, heating oil rose 0.77 cents to settle at $2.5243 a gallon, gasoline fell 1.53 cents to $2.4056 a gallon and natural gas gained 10.4 cents to $4.216 per 1,000 cubic feet.
In other trading, grains and soybeans were also up.
March wheat rose 18 cents to settle at $7.9825 a bushel. March corn rose 8 cents to $6.2325 a bushel and March soybeans gained 2.5 cents to $13.87 a bushel.