Gold jumped more than 1.5 percent in Europe on Thursday, cracking $400 for the first time since mid April helped by a stronger euro against the dollar and Mideast violence which drew investors into the hard asset.
"Clearly we have seen an impressive push higher with a number of gold-positive factors. The question now is whether gold can hold above $400," Barclays Capital analyst Kamal Naqvi said.
The market, which had failed three times this week to break resistance on the way to $400, got a double dose of stimuli with weak US economic data on Thursday plus violence in Iraq and Turkey.
US May durable goods orders were down 1.6 percent, against forecasts of a 1.4 percent increase. The euro spiked to session highs over $1.2180 against the dollar.
Analysts said the data were a surprise, suggesting that the Fed will raise interest rates by just 25 basis points next week, rather than sanction a larger increase.
In Iraq, rebels bent on disrupting a handover to Iraqi rule hit five cities with co-ordinated assaults on security forces in which about 75 people, including three US soldiers, were killed and more than 200 wounded.
Dealers said the currency/Iraq combination was enough to move gold through important technical levels and add momentum to the advance.
Spot gold closed at $401.50/402.00 at 1515 GMT, after hitting a high for the day at $401.70 - last seen on April 19. That compared with $394.50/395.25 quoted in New York late on Wednesday.
Silver ran up more than two percent, with the market inspired by gold's rise. It was last quoted at $6.07/6.09 from $5.86/5.88 in New York on Wednesday.
"There was short-covering after gold broke through $398.75, with stop-loss orders slightly above that level," a European dealer said.
Naqvi said that he felt there was resistance now facing the market on the way up to $405.
"Notwithstanding this punch through $400 I still feel that the trend is sideways to lower. This could just be a temporary reprieve," he said.
The platinum metals were mere bystanders in the wake of action on gold and silver with platinum quoted at $809.00/814.00, up slightly from $806.00/811.00 last quoted in New York on Wednesday. Palladium also move up a touch to $222.00/227.00, from $220.00/225.00.