LONDON, Dec 9: Gold fever took prices to $525.50 an ounce for the first time in nearly a quarter of a century on Friday as investors, particularly in Asia, rushed to buy an asset that has gained some 15 per cent in the past month alone.

The impetus for this buying is coming from the Far East...and it is difficult to see where the selling will come from at present, a trader said.

Spot gold was at $524.30/525.10 an ounce by 1119 GMT, against $519.50/520.30 last quoted in New York on Thursday. The metal has soared $70, or 15 per cent, since November 7

Gold’s tight supply, healthy global demand, worries about inflation and growing fund interest in precious metals and other commodities has unleashed a wave of speculative buying, defying warnings that the market was overbought.

The activity in the bullion market remains very impressive, with aggressive buying of any dips and a dearth of selling in the rallies helping to create a bullish chart pattern of higher lows, and higher highs, thereby attracting more momentum-based fund buying, Alan Williamson of HSBC said.

Fund managers were buying as part of a strategy to diversify portfolios, while some investors were speculating about potential purchases from some of the word’s central banks — previously long-time sellers.

But many are wary of a fund sell-off due to heavy long positions on the New York Mercantile Exchange’s COMEX division and the Tokyo Commodity Exchange. The price of gold has gained about 20 per cent this year and has doubled in about 5 years.

After $525, we could see $530, but the market is nervous about getting too long. If you get caught in December it is difficult to get it back, as we are running out of trading days, the first trader said.

In other precious metals, platinum was at $999/1,003 an ounce, against $998/1,002 late in New York. It earlier rose as high as $1,003 against Monday’s peak of $1,006, the highest since March 1980.

Sister metal palladium was at $298/302 an ounce, the highest since April 2004, versus $278/282.—Reuters