NEW YORK, Nov 21 (Reuters) - Gold futures in New York settled at their highest mark in nearly 18 years on Monday, boosted by speculative buying as traders eye a possible move to the psychological level of $500 an ounce.
Profit taking from gold's recent rally and chart resistance near $490 capped gains for the moment, traders and analysts said, but dips in price were likely to prompt fresh buying.
At the New York Mercantile Exchange, benchmark December gold on the COMEX division hit a life-of-contract high at $490.50, the priciest level for futures since January 1988, before settling up $3.30 at $489.50. The session low was $485.
"Gold is up on continued speculative interest on talk of central bank reserve additions and as a stronger retail interest strengthens the spot market," said James Quinn, commodities commentator at AG Edwards & Sons in New York.
"But there's been a little investment bank selling on the rally," he added.
Many market players believe that gold can soon command $500 an ounce, a price last seen in December 1987, by the end of the year.
James Moore, analyst at TheBullionDesk.com, said gold extended last week's hefty gains on investment buying, and he saw plenty of room for more gains leading up toward the $500 level, before the market becomes technically overbought.
"(But) volatility is set to remain high this week with the Thanksgiving holiday in the U.S. later in the week leading to thin, choppy conditions," Moore said in a report.
NYMEX metals trading will shut early at noon on Wednesday and remain closed on Thursday and Friday for Thanksgiving.
Gold on COMEX has climbed 14 percent, or $59, this year, on robust investor demand due to economic and geopolitical unease in the marketplace. Seven straight quarters of increasing global jewelry demand also have supported the price.
Indeed, COMEX gold has nearly doubled since drifting to $252 an ounce in August 1999.
Its all-time high, based on the nearby futures contract, was $873, reached in January 1980.
The past week's rally also has gotten a boost from the positive sentiment among market participants at a precious metals conference in Johannesburg, analysts have said.
Spokeswomen for the central banks of South Africa and Russia said at the conference that gold will remain an important asset to have in banks' reserves.
Spot gold was worth $488.50/489.25 an ounce. That compared with its new near-18-year peak hit earlier at $489.75 and Friday's New York close at $485.40/6.20. Monday's afternoon fix in London reached $488.95.
The speculative net long stance in COMEX futures climbed to 129,686 contracts as of Nov. 15, from 123,111 lots a week earlier, according to the latest Commitments of Traders data from the Commodity Futures Trading Commission.
And, after the further buying that lifted gold toward the end of last week, the long exposure should be much higher now.
"While the market is now very long again, and some profit taking/long liquidation (is) likely, we no longer expect a sell-off to the degree that we previously expected," UBS analyst John Reade said in a note.
Reade lifted his one-month forecast to $465, from $440 previously, and his three-month forecast to $500 an ounce.
Trading volume has been lifted by rollover into February futures out of December gold before delivery begins next week.
Final estimated COMEX gold turnover was a massive 150,000 contracts, with 35,979 switches.
Open interest in the market fell 1,434 lots to 349,259 lots.
Dubai will launch a new futures exchange on Tuesday with a gold contract it hopes will play to the booming Gulf emirate's traditional strength as a hub of the physical gold trade.
In silver, AG Edwards' Quinn said prices were higher ahead of Tuesday's options expiration, but the contract rollover out of December was making for orderly trade.
December silver rose 6.6 cents to end at $8.133 an ounce, after dealing from $8.035 to $8.17. Friday's peak at $8.18 was silver's highest price since December 2004.
Next resistance looms up at $8.19 and $8.215, with support at $8.00, technicians said.
Spot silver was quoted at $8.11/13 an ounce, off from Friday's 11-month high of $8.15 but above the previous New York close at $8.04/06. The fix on Monday was flat at $8.11.
January platinum shed $4.50 to $981.60 an ounce, still consolidating below last week's near-26-year high of $1,000. Spot platinum firmed to $981/986 an ounce.
December palladium rose $1.75 to $268.75 an ounce, below an earlier high of $270.10 -- its highest price since May 2004. Spot palladium was steady at $264/268.