May 5, 2006	Friday	Rabi-us-Sani 6, 1427

LONDON, May 4: Gold edged down on Thursday from a 25-year high after a recovery in the dollar, but dealers said the metal was expected to advance towards the next big target of $700 an ounce on positive momentum.

Jewellers in parts of Asia showed interest to buy gold on price falls but trading was muted because of holidays in Japan and China. Other precious metals were off their highs.

Gold fell as low as $660.40 an ounce before rising to $665.80/666.80 by 1017 GMT, still down from $666.80/667.80 late in New York on Wednesday, when it had rallied to $676.30 — the highest since October 1980.

Technical indicators suggest that the market has been overbought, but looking at the fundamental side, there are very good reasons for prices to go up, said Michael Widmer, analyst at Macquarie Bank.

Inflation worries, geopolitical tension in the Middle East and the dollar outlook had lifted gold’s appeal as a safe-haven investment and money was pouring into the sector, he said.

The metal has risen 30 per cent this year and doubled in three years. Gold’s all-time high was $85O, set in early 1980.

World Gold Council chairman Pierre Lassonde said on Wednesday he saw gold hitting the record-high level over the next 18 months.

In industry news, Barrick Gold Corp. said it reduced its hedge book, a pile of forward gold sales contracts, by 5.7 million ounces as of Wednesday.

The text, which is still opposed by Russia and China, does not contain sanctions but goes further than a Security Council resolution approved in late March.

In other precious metals, silver was unchanged at $13.69/13.79 and remained below a 23-year peak of $14.68 hit two weeks ago.

Platinum fell to $1,168/1,173 an ounce from $1,175/1,180 late in New York and off a record $1,184 hit the previous day.

Palladium dropped to $372/376 an ounce from $375/380. The metal rose to its highest since April 2002 at $387 on Wednesday on fund buying.—Reuters