Spot gold fell on profit taking in Asia Monday, but after breaching the $1,000 a troy ounce barrier on Friday, market watchers are still tipping prices to hit new record highs. Gold continues to be supported by investment inflows, that so far are offsetting a dearth of jewelry demand. As of Feb. 20, gold holdings at the SPDR Gold Trust, by far the largest listed gold ETF, stood at 1,028.98 metric tons, a record high. And despite gold adding some $180 since last Monday, the market isn't showing signs of forming a bubble, said a Sydney-based trader. The poor state of the global economy and concerns over the banking sector are driving gold purchases, as well as poor equity markets and worries about the long-term impact in inflation from government stimulus packages, Phillip Futures said in a note. If and when gold hits the March record high of $1,032.35/oz, prices are likely to face pressure from profit taking, said the Sydney-based trader. Gold should continue to trade at high levels by historical standards, and prices are likely to benefit from further upside momentum in a sustained economic downturn, Macquarie said in a note. Further macro-economic shocks, competitive devaluation, a euro monetary zone breakdown, admissions of writedowns on credit default swaps and the potential for the slowdown to continue longer than is currently expected were just some of the many low-probability but high-impact catalysts for strong gold, Macquarie said. At 0645 GMT, spot gold traded at $987.40/oz, down $5.80 from the New York close. Silver was 5 cents lower at $14.36/oz. Platinum traded at $1,076.50/oz, down $4.50, while palladium was unchanged at $213.00/oz. On Tocom, gold futures were up Y1 to Y2,965 a gram, and platinum futures were down Y28 at Y3,225/gram.

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