Gold held near six-week highs in Europe on Thursday as investment fund buying and offtake of bullion denominated in currencies other than the dollar lifted the market conclusively above $430.00. "It has been driven by the funds. There is money moving into gold, irrespective of what the dollar is trading at," a trader said.
Spot gold was quoted at $433.80/434.50 a troy ounce by 1446 GMT, up from New York's late quote on Wednesday of $428.85/429.60, having peaked at $434.40.
"On the whole I expect the funds will be keen to push the metal further....the real test will be if gold can clear $438, which it failed to do at the end of April," James Moore of TheBullionDesk.com said.
Traders said this week's sea-change in gold's usual inverse relationship with the dollar continued, and the market retained strength despite a firm US currency.
"It is making good ground in other currencies. This is disappointment with the euro, and people are popping into gold," the trader added.
The dollar held near recent nine-month highs versus the euro as European Union leaders gathered to broker a budget deal and salvage the EU constitution after rejection by French and Dutch voters.
The euro was trading around $1.2077, while euro-denominated gold hit a new all-time of 359.06 euros. Fund buying in New York also sent COMEX gold up to $436.80/oz, a six-week high.
"An absence of heavy selling during Asian hours on Thursday morning appears to have given gold bulls new heart," said John Reade, precious metals analyst at UBS Investment Bank.
"One note of caution, however, would be that underlying physical demand has softened in recent days as consumers digest the sharp move higher in the last two weeks and await some form of correction lower," Alan Williamson, analyst with HSBC, said in a report.
"On balance though, we continue to believe the short-term risks are on the upside."
Gold has moved in a broad $437-413 range since late April. It peaked at $446.70 an ounce in mid-March, falling back after it failed to get back up to a 16-1/2-year high at $456.75, hit in early December 2004.
Pierre Lassonde, president of the world's largest gold company, Newmont Mining Corp, told the Reuters mining summit last week that he expected prices to reach $525/oz by January 2006.
Gains were seen in most other precious metals, with silver at $7.38/41, up from its late New York level on Wednesday of $7.29/32.
Platinum rose to $884.00/888.00 from $878.00/883.00, but palladium dipped to $186.00/190.00 from $189.00/194.00.
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