European gold rises

Gold drifted higher on Wednesday as the dollar slipped against the euro after early gains and oil prices strengthened. Analysts remained positive on gold's long-term outlook, saying a possible decline in the dollar on the back of concerns related to US economic growth might generate more interest in gold among investment funds.
Gold rose as high as $663.60 an ounce and was quoted at $662.00/662.50 at 1249 GMT, compared with $658.80/$659.30 in New York late on Tuesday and last week's low of $653.40, the lowest since March 20.
"The correlation with the dollar is still quite strong and certainly yesterday and today we have seen gold tracking the dollar," Suki Cooper, precious metals analyst at Barclays Capital in London, said.
"In a very short term, prices will probably consolidate around these levels before the next push up. We do see prices rising above $700 in the third quarter, driven by a number of factors," she said.
A potential weakness in the dollar going forward, good physical demand and geopolitical concerns were expected to support gold in the medium to long term, she said.
The dollar slipped against the euro after hitting six-week highs against a basket of currencies, while oil climbed towards $70 a barrel as US warships put on a show of force off Iran's coast, coinciding with a United Nations agency report on the Islamic republic's nuclear programme.
A weaker dollar makes gold cheaper for holders of other currencies. The metal is also seen as a hedge against oil-led inflation. In other metals, platinum touched a three-week low of $1,281 an ounce before rising to $1,292/1,296, against New York's $1,285/$1,290.
"Regardless of what happens in the short-term, we remain bullish for platinum in the long run on the back of a sound fundamental situation and on the prospect of more investment rushing into this market," said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Germany's Heraeus.
"We think that we might well exceed in the next 6 to 18 months the last all-time high seen in November." Silver rose to $13.06/13.10 from $12.92/12.96 an ounce, but palladium eased to $372/377 an ounce after matching Tuesday's two-week high of $374/$378 in New York.
Global silver fabrication demand fell less than 1 percent to 840.5 million ounces in 2006 on robust industrial applications growth, even though the average silver price rocketed 58 percent in the same period, said a report, compiled by research firm GFMS Ltd showed.