Gold climbed to a new near 18-year high level in Europe on Friday as funds continued to buy amid worries about inflation and US economic growth, dealers said.
Spot gold surged to $475.40 a troy ounce, the highest level since January 1988. By 1519 GMT, it was trading at $474.60/475.30, compared with $472.00/472.70 last quoted in New York on Thursday.
The metal has gained nearly seven percent in a month. "I see this market to go 500 dollars by the end of this year and this is just a step in that direction," said Peter Hillyard, head of metals sales, Europe, at ANZ investment Bank. "It's fund buying and nothing more than that. Funds are believing that the commodity complex is the right investment."
Traders said some currency movement also supported gold, while worries about inflation continued despite a drop in crude oil prices.
The dollar pared some gains against the euro on Friday, with traders citing news of the partial closure of New York's Pennsylvania station as one reason.
The euro briefly moved up to around $1.2130 according to Reuters data from around $1.2100 shortly before the news broke. The euro was traded at $1.2116 by 1517 GMT.
A weaker dollar makes gold cheaper for holders of other currencies. Oil steadied above $61 as the market sought to balance weakening fuel demand in the world's top consumer, the United States, against lost supplies of gasoline and heating oil from US and French refiners.
Traders said gold was expected to trade in a range between $470 and $476 an ounce in the near term, before attempting a higher level.
"I think the main reason for this move up continues to be concerns over inflationary pressures and also on the likelihood of an economic slowdown caused by high oil prices," said Yingxi Yu, analyst at Barclays Capital.
When the euro weakened last week, gold appeared to follow crude oil prices, but since crude oil prices have eased, gold has renewed its more traditional relationship with currency markets.
"This just shows that investors are looking for excuses to push the metal up. In the current bull run, a lot of people are very optimistic." Some traders said the market would now target the $480-mark in the coming days. "All the elements such as inflationary concerns, high oil prices and strong physical demand remain in place, keeping gold locked in its current uptrend in the coming months, despite having a lightly overbought tinge in the short-term," the TheBulliondesk.com said in a report.
In other precious metals, spot silver was at $7.69/7.72 versus $7.54/7.57, while platinum rose to $929/932 from $925/928 last quoted in New York. Palladium was at $198/200 versus $194/197.