LONDON, Nov 28: US holidays sapped liquidity from the gold market on Friday, but a surging euro, which strode to fresh life highs against the dollar, took the precious metal to within less than two dollars of $400.00 an ounce.

The euro rose to a record high against the battered dollar on Friday, capitalizing on bearish sentiment against the US currency and propelled by expiring options holdings in derivatives markets.

Dealers said the market was exceptionally quiet due to the US Thanksgiving holiday, which shut New York COMEX futures for two days.

Spot gold was quoted at $398.00/398.75 an ounce by 1535 GMT, up from $395.50/396.20 at the London close on Thursday.

Traders said the market would probably be content to wait until next week to see New York’s reaction to the new highs on the euro and whether this would entice further fund buying of bullion.

“There is no real reason for gold to make new gains and anyway the US guys always bring it back to test their closing levels prior to the holidays,” one trader said.

Spot gold was trading around $396.25/397.00 in Wednesday’s late trade, while February gold futures closed at $398.00 an ounce, up $5.60 on the previous day.

Analysts said the euro would be the chief catalyst in taking prices higher. The bullion market had shrugged off a trail of strong US economic reports this week and continued to focus on a weaker dollar, which had fuelled demand for safe-haven gold during this year’s bull market.—Reuters