By 0646 GMT, spot gold was at US$512,60 / US$513,40 an ounce, up from US$510,50 / US$511,30 last quoted in New York on Tuesday.

Earlier, gold hit US$513,00 / US$513,80 - the highest level since April 1981.

In April 1981, the London gold fix by bullion dealers reached US$534,25, according to data from The London Bullion Market Association.

In January 1980, it hit a record level of US$850.

"The market is still looking very bullish," said a bullion dealer with a major investment bank in Singapore.

"Still unresolved buying out of Japan is pushing it higher."

The Japanese seemed to believe that markets like equities and bonds were peaking, and gold was a safer investment to maintain steady rather than huge gains, he said.

More market reports showed gold had a further upside, with one saying bullion could hit US$600 an ounce before Christmas or year-end, he said.

"I don't believe that for a minute, but I have just read about that development on the Internet.

There are some people thinking there is a considerable upside yet to come in this market."

He said the gold market has been supported by two factors.

One was that people have been diversifying their investment from traditional financial securities, such as shares and bonds, into gold and other commodities.

The second factor relates to recent decisions by some central banks to increase the amount of gold in their reserves and speculation it would not be long before Asian central banks with very low gold reserves followed suit.

In November, Russia, Argentina and South Africa decided to increase the amount of gold in their reserves, reversing a six-year trend of central bank sales, mainly from Europe.

- Nampa-Reuters

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