LONDON, Sept 29: Gold crept to within $2 of last week’s 17-3/4-year high in Europe on Thursday as funds continued to buy on the back of high crude oil prices and the dollar softened a little versus the euro, dealers said.
Looking ahead, gold was expected to touch the $480-an-ounce mark before potentially surging to $500 and above by the middle of 2006 on geo-political worries, strong physical demand and volatile currency markets, they added.
Spot gold subsequently retreated to $470.70/471.50 a troy ounce , still up from $469.05/469.75 in the late New York trade, but off an earlier peak of $473.10.
Bullion reached $475 one week ago, which was its firmest since July 1988.
I think the current environment is very supportive for gold, said Yingxi Yu, precious metals analyst at Barclays Capital.
There is still a considerable amount of fund buying interests on price dips.
She said gold was finding good support due to ongoing economic uncertainty and the increased risk of inflation following higher crude oil prices.
Oil held firm above $66 a barrel, stoked by fears that hurricane-wrecked US refineries would be unable to churn out ample heating fuel to warm American consumers this winter.
Oil-driven inflation concerns seem set once again to propel the gold market higher with fund players keen to push the market in their favour, said James Moore of The Bulliondesk.com in a daily report.
Some traders felt the market was overbought and therefore vulnerable to a sell off by speculators as they book profits.
The euro stabilised after a dip below $1.20 against the dollar earlier this week.
Gold denominated in euros hit a new record high above 392 euros.
Silver tracked gold and traded at $7.39/7.42 versus $7.33/7.36 in New York on the previous day. Traders expected prices to move between $7.10 and $7.40 on Thursday.
Platinum was at $922/925, up from $915/$919, while sister metal palladium was at $194/197 against $196/200.
