Gold's allure as a hedge against inflation and a safe-haven asset got a boost as oil leapt to a lifetime high of $100 a barrel on Wednesday and the dollar tumbled.
"With the dollar under pressure once again and new year fund allocations being made, it is not surprising that a range of commodities has started 2008 very strongly," said Tom Kendall, metals strategist at Mitsubishi Corporation.
"We do not see any change to the bullish drivers for gold in the short term and the market could easily add another $15 to $20 over the next few days before correcting," he said, adding the metal was getting help from geopolitical instability.
Spot gold rose as high as $866.10 an ounce and was quoted at $865.40/866.10 by 1055 GMT (12:55 South African time), up from $855.70/856.50 late in New York on Wednesday.
The metal jumped more than 30% in 2007, its biggest annual gain since 1979.
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