Gold eased back in Europe on Friday as the market paused after funds had fanned prices to fresh 5-1/2 month peaks, with dealers eyeing the dollar/euro for further direction.
Dealers said the market had potential for a run at $420 an ounce and beyond after consolidating.
Spot gold was at $417.70/418.50 per troy ounce by 1450 GMT, compared with $418.00/418.75 quoted late in New York on Thursday.
The market had attracted fresh interest from fund operators this week, spurred initially by inflation worries stemming from record oil prices before the euro spiked to a two-month high against the dollar, making gold more affordable for non-US investors.
Dealers said range trading was needed, however, ahead of an assault on $420.
"Some profit-taking came in on its high this morning and together with lower oil prices and no significant impetus from the currency side it should hold between 414.40 and today's high," a European dealer said.
The dollar gained against the euro after data showed stronger-than-expected expansion in the US manufacturing sector in September.
The bullish reaction might have been muted slightly, however, as markets remained wary of any currency fireworks from a Group of Seven meeting of finance ministers opening in Washington.
The euro was at $1.2391, down from a peak earlier of $1.2438.
Gold was now less than $15 off the 15-year peak scored in early January at $430.50, when the euro surged against the dollar.
"Despite the threat that some of yesterday's moves were month/quarter-end manipulation, the market seems general happy to test higher," James Moore of TheBullionDesk.com said in a daily report.
"The combination of dollar weakness, geo-political tensions and high oil prices all indicate a test to $425 and potentially the year's high," he added.
Platinum stayed firm, with prices supported by strike action in South Africa.
The world's largest platinum producer Angloplat said on Friday output had not yet been hit by a widening work stoppage over wages that has already shut down number two Implats.
Workers have called strikes against the two companies, which together account for around two-thirds of the world's supply of platinum, mainly used in jewellery and in catalytic converters to remove pollution from auto exhausts.
Analysts said platinum supplies were unlikely to be hit immediately due to long supply pipelines.
Spot platinum rose to $859.00/$864.00 from $858.00/$863.00 in New York late on Thursday.
Palladium stood at $219.00/$224.00 from $218.50/$224.50.
Silver eased back after spiking sharply with gold on Thursday. Spot silver was at $6.86/$6.89 from $6.88/$6.91 previously.
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