LONDON, Sept 24: Gold gained in Europe on Monday to trade near 28-year highs, with the dollar’s decline to record lows lifting bullion purchases from investors and speculators.

Spot gold rose as high as $735.90 an ounce and was at $733.35/734.05 against $731.60/732.40 in New York late on Friday, when it hit an intraday high of $739 -- the highest since January 1980.

Gold is doing quite well and we see a very steady uptrend at the moment, but we expect a small consolidation at some stage, said Michael Kempinski, senior trader at Commerzbank.

The dollar is one of the main factors nowadays. Our target is $750 and I don’t think we have to wait more than two weeks for that, he said adding, inflation fears and gold’s safe-haven appeal were good reasons to buy gold.

The dollar fell to a record low against the euro for a third straight session, weighed down by expectations of further US interest rate cuts, which are tarnishing the currency’s appeal to global investors.

The continued weakness of the US dollar against the euro and other currencies is likely to remain the driving force for gold, Dresdner Kleinwort said in a daily research note.

Gold spiked to a record high of $850 in January 1980 when investors bought the metal heavily on high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution.

Goldman Sachs raised its gold forecast to $775 an ounce in three months from its earlier prediction of $700. It saw prices at $800 in six months and at $750 in a year from an earlier forecast of $715 and $725 respectively.

The metal has surged more than $100 or 17 per cent this year.

We have noted net long positioning on COMEX and net inflows in ETFs, and with the dollar so out of favour, we believe that the gold price may well breach our 3-month trading target of $750 an ounce, said UBS analyst Glyn Lawcock in Sydney.—Reuters