Gold Breaches $700 Mark

Updated from 12:11 p.m. EDT

Gold breached $700 an ounce Tuesday, as jitters over Iran's nuclear plans resurfaced, the dollar fell and concern built ahead of Wednesday's meeting of the Federal Reserve.

Gold for June delivery finished at $701.50 an ounce for a gain of $21.60, or 3.2%, on the session. It earlier reached an intra-day high of $702.30. The $700 mark had not been breached since October 1980.

Other metals followed gold's lead, with silver for July delivery adding 69 cents, or 5%, to $14.46 an ounce and copper for July delivery up 9.4 cents, or 2.7%, to $3.59 a pound.

"There's nothing to stand in [gold's] way with so much positive momentum," says Peter Grandich, metals analyst and editor of the Grandich Letter. "Is there going to be a correction? Yes, because nothing goes up in a straight line. But the only question is from what price," Grandich says.

The $700 mark, he says, opens new uncharted grounds for gold, offering no real technical resistance on the way up. With many players expecting an impending correction, a lot of short positions are getting squeezed, Grandich adds.

Multiple factors have been driving gold's bull run. But in recent weeks, the day-to-day moves have been dictated by jitters over Iran's nuclear ambitions. Iran, the world's fourth-largest producer of crude oil, refuses to stop its nuclear program, which it says is for the generation of civilian energy.

Gold serves as a safe-haven asset amid geopolitical uncertainty and as a hedge against inflation, such as soaring crude oil prices. Crude oil touched $75 a barrel two weeks ago, as tensions ran high.

But both gold and crude had fallen back on Monday, following news that Iranian President Mahmoud Ahmadinejad had written a letter to President Bush seeking "new solutions" to their differences.