SAN FRANCISCO (MarketWatch) — Gold prices high a record high, soaring above $1,700 an ounce Monday as Standard & Poor’s downgrade of the U.S. credit rating amplified worries about the global economic outlook, playing up the metal’s safe-haven status.

Gold for December delivery GC1Z advanced $61.40, or 3.7%, to $1,713.20 an ounce on the Comex division of the New York Mercantile Exchange.

S&P chief explains U.S. downgrade

It rose as high as $1,721.90 an ounce, an intraday record for the metal.

While the U.S.’s troubles with deficits are not new, the S&P downgrade “did tell investors, ‘Look, the only place we’re going to get some yield is gold. Everything else scares the bejeezus out of me,’” said Michael K. Smith, with T & K Futures and Options Inc. in Florida.

“I think more money is going under mattresses than into gold,” he added.

S&P late Friday downgraded the U.S. credit rating to AA+ from AAA. Another dose of heavy losses on Wall Street aided gold’s surge.

Analysts at Goldman Sachs, for one, see further upside for the precious metal.

Gold prices will “continue to climb in 2011 and 2012 given the current low level of U.S. real interest rates,” they wrote in a note Monday.

Analysts at Bank of America Merrill Lynch said the downgrade “will no doubt weigh further on the already very negative sentiment toward the [U.S. dollar] and accelerate the pace of reserve diversification” away from the U.S. currency.

The U.S. dollar index DXY, -0.06% , which measures the greenback against a basket of six currencies, rose to 74.705 from 74.592 late Friday. The currency benchmark had been lower earlier, further underpinning gold. Read full story on currencies.

Gold prices and the dollar often tend to move in opposite directions, as the metal’s dollar-denominated price is used as the international benchmark and a higher dollar means a higher price for holders of other currencies.

U.S. stocks opened sharply lower, and Treasurys rallied, reflecting investors’ bearish reaction to the S&P downgrade. Read more about stocks.

Asian and European stocks got a black eye as investors dumped equities and pared exposure to risk assets.

Also Monday, silver settled higher, albeit not at the same pace as gold. Silver for September delivery SI1U added $1.17, or 3.1%, to $39.38 an ounce.

October platinum PL1V gained after wavering between small gains and losses earlier in the session. The contract added $4.50, or 0.3%, to $1,723.60 an ounce, moving closer to gold’s per-ounce price.

Analysts have estimated gold costs about $1,000 per ounce to mine, whereas platinum costs about $1,600 an ounce.

Gold and platinum reached parity back in December 2008. Platinum, a precious metal, nonetheless gets most of its strength from demand from the industrial side.

“You’ve got issues on the macroeconomic front in a lot of countries ... that doesn’t bode well for the price of a cyclical metal,” said Michael Widmer, a metals strategist with Bank of America Merrill Lynch in London.

Platinum’s supply constraints, however, are likely to support prices in the long term.

South Africa’s National Union of Mineworkers is in negotiations with three mining companies that are responsible for two-thirds of the world’s platinum output, and talks have dragged.

Meanwhile, copper ended 3.8% lower, with the September contract HG1U off 16 cents to $3.96 a pound.

Miners at Chile’s Escondida, the world’s largest copper mine, voted to end their two-week strike last week.

Palladium for September delivery PA1U retreated $13.25, or 1.8%, to $728.50 an ounce.