Gold at one-week peak in London as US data hits dollar

Gold prices moved to their highest in a week in Europe on Thursday as worries over the US trade deficit caused the dollar to skid sharply against the euro, dealers said. "This looks like general trade buying on the back of the euro, which is winning back some lost ground," one dealer said. Spot gold jumped to end European trade at $417.15/417.90 per troy ounce by 1615 GMT after hitting a peak of $417.85 - last seen on February 4.
That compared with $412.75/413.50 late in New York on Wednesday. Dealers said the market had been looking oversold after hitting a one-month low of $410.40 in the previous session.
The dollar slid sharply - making gold more attractive for non-US investors - when a report showed the US trade deficit narrowed in December as oil import prices had the biggest decline in nearly 14 years.
But the annual trade gap had still widened more than 24 percent in 2004 to a record $617.7 billion.
The euro was last at $1.2883 - having initially fallen to a session low of $1.2740 just after the trade report.
Persistent worries over how the world's biggest economy can plug its gaping deficits have weighed heavily on the dollar over the past three years and helped gold to scale a 16-1/2 year peak at $456.75 in December.
"It seems that all of the fall in the monthly trade figure is to do with what happened with oil, there was no underlying improvement in the deficit," HSBC metals analyst Alan Williamson said.
Standard Bank said in a daily report that chart watchers had gained encouragement from gold's ability to maintain a foothold above the 200-day moving average at $412.70.
Platinum, which hit its lowest in a month on Wednesday, staged a recovery to $863.00/868.00 from $846.00/850.00 late in New York on Wednesday, but traders said the metal could face more pressure - pegging support at $840.00.
Analysts said the world's two biggest platinum producers, Angloplat and Implats, were set to post higher profits in coming weeks, but investors would focus more on whether the South African firms have to curb expansion plans.
Silver headed up sharply in line with gold $6.92/6.94 from $6.56/6.59 previously.
Dealers reported investor interest, but physical demand fundamentals remained lukewarm. Palladium was also steady at $178.00/182.00 from $177.00/181.00.