Gold extended gains to nearly 3 percent to rise above platinum for the first time in 12 years on Thursday as the dollar lost ground against the euro, boosting the precious metal's appeal as a currency hedge.
Traders kept a close eye on a $14 billion (9.4 billion pound) plan to bailout U.S. carmakers as platinum, mainly used as a component in catalytic converters, is particularly vulnerable to a downturn in the auto sector.
Spot gold hit a high of $833.80 an ounce and was around $828 an ounce when spot platinum fell below the bullion to trade around $824-825 an ounce.
"There's going to be people playing this ratio between the two from a trading point of view," precious metals strategist Tom Kendall at Mitsubishi said.
The yellow metal was at $823.50 an ounce by 4:22 p.m., versus 809.90 an ounce late in New York on Wednesday while platinum was at $825/845 an ounce against $822.
"But in the big scheme of things I don't think there is much overlap between the two in terms of their actual use and physical demand," he said.
"We've seen euro fly up today and try and push through what is quite a significant barrier around 1.3280 mark and fail and that's what really been at the forefront of the market today along with the move higher in oil."
"That's really what gave gold a lift," he said.
The dollar hit a six-week low against the euro, as doubts crept in over whether projected pent-up demand for the currency would materialise over year-end.
In sterling terms, gold rose to an all-time high of 559.18 pounds an ounce, according to Reuters data, up from 546.51 pounds an ounce late on Wednesday. The euro hit a record high against sterling.
Gold is often bought as an alternative asset to the dollar and tends to move in the opposite direction to it.
U.S. gold futures for February delivery rose more than 3 percent to a high of $835.30 an ounce, and were later quoted at $827.60, up $18.80.
The other main external driver of gold, the oil price, was also supportive, ticking up above $46 a barrel as signs emerged that top exporter Saudi Arabia was preparing to slash January supplies ahead of next week's meeting of oil cartel OPEC.
Crude also received a fillip from the International Energy Agency's monthly report, which said it saw global demand growing in 2009 and expected OPEC to cut supplies next month.
Rising oil prices help support interest in commodities as an asset class, and can boost gold's appeal as an inflation hedge.
But the market remained jittery as it awaited to hear more on the outcome of a $14 billion U.S. proposal to bail out carmakers. The proposal passed the House of Representatives but is likely to hit resistance in the Senate.
Platinum and palladium traders in particular awaited the outcome of the plan. Carmakers account for more than half of annual global consumption of the metals.
Until more definite news on the bailout package emerges, the metals are likely to remain rangebound, analysts said.
"With the final decision on the U.S. bailout packages now unlikely till after the weekend it is more than likely platinum will remain in the $780-882 range," noted James Moore, an analyst at TheBullionDesk.com.
Spot palladium was at $175.50/183.50 an ounce against $177.50. Among other precious metals, spot silver rose to $10.38/10.46 an ounce from $10.21.
(Additional reporting by Humeyra Pamuk; editing by Peter Blackburn, David Evans)
