Gold hit a fresh four-week high at $436 an ounce in Europe on Wednesday, taking its cue from a sharp rise in the euro to a two-month high versus the dollar. Bullion prices, which have risen by over three percent in the past seven days, had previously run into heavy selling around $432.
By 1513 GMT spot gold was up nearly one percent at $436.00/436.70 a troy ounce, against New York's late quote on Tuesday of $431.90/432.70.
Traders said sentiment was also being buoyed by a potential strike in top producer South Africa.
"I think a combination of strike talk and then that break higher by the euro has driven sentiment since this morning," one said.
Analysts were now looking for the precious metal to target $440-$445.
Gold rose as high as $443.60 in June, which was its third failed attempt to climb back to a 16-1/2-year peak scored late last year at $456.75.
The euro was at $1.2325 by 1517 GMT, having peaked earlier at $1.2335 when a break of key technical resistance triggered broad-based dollar selling.
Also driving the euro's momentum in recent days was market talk that oil-rich countries, flush with record crude prices, were diversifying their dollar-heavy reserves into euros.
Rumbling along in the background was news that miners in South Africa, the world's biggest producer, plan to go on strike on Sunday.
Given massive above-ground stocks, which some analysts have estimated at around 300 weeks of demand, the disruption to supply should not cause too many problems.
Alan Williamson, analyst at HSBC Bank, noted also that South Africa's share of global production had fallen from over 70 percent to just under 15 percent over recent years.
"Any production loss in South Africa would equate to around one tonne per day, hardly significant in the global gold market," he said, pointing out that prices were far more driven by currency than commodity considerations.
Platinum calmed in Europe after scoring a fresh 15-month high in early trade at $913 an ounce. Spot was last at $911.00/917.00, still up from New York's $900.00/905.00.
The rally, which has pushed prices up 4.3 percent over the past week, has been mainly speculative driven.
"Without any industrial participation, prices do not seem likely to sustain higher levels," Dresdner Kleinwort Wasserstein said in a report.
UBS's John Reade also noted the last time platinum moved over $900 in March 2004 it only managed to stay there for about 10 days before falling quickly.
Platinum is used mainly in jewellery and in autocatalysts to clean exhaust fumes.
Key jewellery consumer China, which accounted for nearly half of total purchases of platinum for jewellery manufacture in 2004, is very price sensitive. Demand fell 12 percent in 2004 due to high prices.
Palladium fell to $191.00/195.00 from $192.00/194.00, while silver rose to $7.26/7.29 from $7.22/7.25.
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