LONDON, Oct 30: Gold prices smashed through the $390 per ounce barrier on Thursday, coming within a whisker of recent seven year highs before retreating in response to a jump in the value of the dollar.

On the London Bullion Market, the spot price of an ounce of gold rose to as high as $391.30, close to a seven-year high of $393 seen in late September.

But the precious metal gave back some of its gains after the dollar rose on strong US growth figures, making the metal less attractive to non-US buyers.

In late London trading the spot gold price stood at $387.10, up 60 cents from the closing level on Wednesday, when prices had also risen sharply.

“There is little in the external gold environment currently to explain away the big upward move in prices,” said Barclays Capital analyst Ingrid Sternby.

“Recent positive factors such as dollar or equity market weakness are largely absent and the physical gold market is described as fairly sluggish at present.

“Our interpretation of the upward momentum is that funds have decided to rebuild gold positions after cutting them back sharply in the second half of September and for most of October so far.”

Should this trend continue $400 per ounce will be the next technical target, analysts said.

“The weakness in gold proved to be very short-lived and the metal has found renewed buying interest,” said UBS analyst John Reade.

“We continue to believe that gold can rally again and still believe that there is a better than 50 per cent chance of gold trading through $400 per ounce before year end.”

Gold was also gaining support from the rest of the precious metals complex, with platinum reaching a fresh 23-year high of $763 an ounce on the London Platinum and Palladium Market.—AFP