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The spot price of gold was quoted marginally lower on Tuesday, after breaking above $550 a troy ounce for the first time since January 1981 on Monday evening.

At 10.05am, gold was quoted at $545.05/oz, down $3.90/oz from the metal's previous close. On Monday evening gold climbed to a high of $551.80/oz.

In January 1981, gold was fixed at a high of $602.25/oz.

"Gold closed very firmly in New York on Monday and briefly climbed over the $550/oz mark after New York closed. During Tokyo Commodity Exchange (Tocom) trade, gold was pushed down to $545/oz. The gold market is largely being driven by the funds," a London trader said.

The gold market was also jittery about the news last week that the Chinese government was looking to diversify its foreign exchange reserves away from the US dollar and US government bonds, which could possibility see the Chinese buy gold, he added.

"The way the gold market is going, it is difficult to be bearish. If the gold price were to break through $551/oz again, then the next resistance level would be $562/oz," the London trader said.

Platinum climbs to fresh 25-year best

Fund buying in tandem with the strong gold price on Tuesday morning took the spot price of platinum to $1018 an ounce, which was the metal's highest level since March 1980 when platinum climbed to an all-time high of about $1040/oz.

At 10.15am, platinum was quoted at $1012/oz, up $9/oz from the metal's previous close.

"Platinum is following gold, which crossed the $550/oz mark yesterday. There is no specific fundamental factor that is driving platinum at this stage. Platinum is likely to track gold for a while still. As long as there is upside for gold, platinum will continue to benefit," said London-based Barclays Capital analyst Yingxi Yu.

Yu questioned the long-term sustainability of current platinum prices, which were largely being driven by speculative activity in the market, while at the same time the physical market for platinum was quiet.

As long as speculators bought gold and platinum, the price of platinum would continue to move higher, and there was no sign that sentiment toward these metals was about to turn, Yu said.

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