A weaker dollar versus major currencies sent US gold futures moving toward a 28-year high early on Wednesday, but the precious metal must breach above chart-based resistance before rising further.
Meanwhile, data showed that European central banks had sold less than 500 tonnes in the third year of the Central Bank Gold Agreement, which could be a bullish sign for the future price of gold.
"We are seeing (buying) pressure coming from the dollar. They are hitting the dollar again. Basically it's propping up gold here," said Joseph Guzzardi, a floor trader of Sabin Commodities in New York. At 10:30 am EDT (1430 GMT), most-active December gold on the Comex division of the New York Mercantile Exchange was up $7.00 at $750.10 an ounce.
Gold had jumped as much as $8 or so to a session high of $751.90. It hit a low of $742.80. December gold hit a peak of $755.70 on October 1, which marked the loftiest level since February 1980, when it set a record high of $850.
"We are still having trouble at the $750 to $760 area. We have some good resistance there. If we get through that area, I think we will be OK," Guzzardi said. The dollar fell as currency investors worried that the Federal Reserve may cut interest rates again this year to boost the economy after the US central bank disclosed the minutes from its September meeting late on Tuesday.
The Fed's September 18 meeting minutes showed that all members of the Fed's policy-setting committee agreed a half-percentage-point federal funds interest rate cut was necessary to shield the economy from credit disruptions and an intensifying housing slowdown.
Gold bullion was quoted at $744.40/745.20, up from the New York Tuesday close at $735.50/736.20. London bullion dealers fixed the morning spot reference price at $740.50.
Comex December silver was up 15.7 cents or 1.2 percent at $13.74 an ounce, trading between $13.585 and $13.790. Spot silver was quoted at $13.61/13.66, which was higher than Tuesday's late New York quote of $13.47/13.52. London silver was fixed at $13.62. Nymex January platinum jumped $20.3 or 1.5 percent to $1,399.90 an ounce. Spot platinum was quoted at $1,388/1,392. December palladium rallied $10.60 or 2.9 percent to $378 an ounce. Spot palladium fetched $374/378.
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