US gold futures for February delivery settled up $6.80, or 0.52 percent, at $1,316.10 per ounce. "(Gold's) rally has been part and parcel with the weaker dollar," said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle. "The tax plan seems to have changed the tenor and trend of the market," he added, referring to the Republican tax overhaul expected to balloon the US budget deficit. Technical analysts warned that gold's rally is looking overdone.
Key factors for the bullion market this year will be how quickly central banks normalize interest rates, how much further the equities rally goes, the longer-term impact of US tax reforms, and when inflation will pick up, Mitsubishi analyst Jonathan Butler said. Palladium jumped 3.12 percent to $1,094.10 per ounce.
Prices rose to $1,096.50, surpassing a previous record set in January 2001. Palladium was the stand-out performer among major precious metals last year, jumping 57 percent to hit a series of multiyear highs. Among other precious metals, spot silver was up 1.4 percent at $17.184. Platinum was 1.70 percent higher at $941.50 per ounce.