Volatility in gold rose sharply as New York headed towards lunchtime on Thursday. But the metal clung onto the bulk of its $20 gains from Wednesday, ranging between $677 and $681 per ounce.
Against the other major currencies, gold also continued to trade strongly, staying above £347 for Sterling investors and remaining near €518 per ounce for Eurozone buyers.
"We're seeing enormously volatile movements and it'll discourage buyers," reckons one US fund manager, however.
"The physical market can't handle volatility."
"At these prices," agrees Philip Newman, senior analyst at the GFMS consultancy in London, "demand would have been hit quite significantly on the jewelry front."
"You would need to have stability and demand may start to come back slowly."
Even so, the strength of investment demand today kept gold at a fresh 9-month peak by the PM Fix in London.
Above $676 per ounce for the time since last May, it beat the average London price recorded that month too – back when gold surged to $725 per ounce to hit levels last seen more than a quarter of a century before.
And gold is only rising alongside stocks, too. European equities just closed higher for the day. The Nikkei in Tokyo ended Thursday above 18,000 for the first time in nearly 7 years. (Click here for why London equities are rising – and why UK house prices just refuse to go down...)
"The market is very bullish and $700 an ounce is clearly in focus," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management, to Reuters earlier.
Gold futures for Dec. delivery reached the equivalent of $683 in Tokyo today.
Without doubt, the real driver of Wednesday's surge – and the consistent investment demand seen in the market on Thursday – was the US inflation data released yesterday.
Core CPI inflation rose 0.3% in Jan., said the Labor Department. Wall Street had been expecting less than half that.
Given that most analysts have been discussing when the Fed will cut Dollar interest rates, the shock of yesterday's data sent money pouring into gold.
"The Fed is going to stay the course," reckons Richard Berner, chief US economist at Morgan Stanley in New York. "Data on inflation remind us that the Fed has little incentive to ease monetary policy."
Berner sees no change in Fed rates before next year. But with CPI rising while the Fed sticks at 5.25%, real rates in the US are falling.
That doesn't bode well for America's famously negative savings rate right now. History says it will continue to push more money into gold.