Gold gained on Wednesday, heading for its seventh quarterly rise and its biggest increase since end-2007, after holdings in the world's largest bullion-backed ETF hit another record as investors rushed for safety from tumbling stock markets.
The Nikkei dropped more than 2 per cent after Wall Street tumbled in a sell-off triggered by a wave of rising alarm over the outlook for the global economy.
Spot gold rose $US3.65 to $US1241.65 an ounce after volatile trade on Tuesday, when it dropped toward $US1220 before bouncing to around $US1241. Gold struck a record near $US1265 an ounce last week.
"There's some uncertainty in the near future, causing the market to push up a little bit. There's some safe haven buying," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"We can say we will trade between $1225 and $1265 for sometime. We need the investment funds to push it up."
US gold futures for August delivery were steady at $US1,242.7 an ounce. The contract hit an all-time high at $US1,266.50 last Monday.
Gold has struck a record because of worries the sovereign debt crisis in Europe could spread and the US economy is slowing.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings rose to a record 1320.436 tonnes by June 29 from 1316.177 tonnes on June 24. The yen and the Swiss franc held on to broad gains on Wednesday as nervous investors rushed to unwind leveraged carry trades on the back of a significant deterioration in risk appetite.
Global financial markets also face pressure after data showed a fall in US consumer confidence, a downward revision to China's leading indicators index and an unexpected rise in Japanese unemployment.
"There's selling pressure in stock markets and other commodities, but we've seen a little bit of safe haven buying in gold. I think we have a good support around $1225 and $US1228," said a dealer in Hong Kong, referring to previous lows.
"If we trade above $1250 again, we have another chance to hit a record high again."
Silver and palladium were steady, while platinum tracked industrial metals and equities lower. The MSCI index of Asia Pacific shares outside Japan dropped 1.3 per cent, tracking a 2.65 per cent slide in the Dow Jones industrial average and an over 3 per cent drop in the S&P 500 Index.
Shanghai copper fell more than 2 per cent on Wednesday after London prices tumbled the following day as worries about the global economic outlook recovery hit the market.
