NEW YORK, Sept 20: COMEX gold surged on Friday amid dollar weakness and anticipation of a renewal of the Washington Agreement curbing central bank sales at this weekend’s International Monetary Fund Meeting in Dubai.

Minutes after New York metals trade wrapped up for the weekend, a Group of Seven official helped lay to rest weeks of speculation, saying G7 central bankers will begin talks on a new 5-year gold deal on Saturday, adding that the new agreement could raise the limits for official sales incrementally.

December gold ended up $5.20 at $382.90 an ounce. It traded from $376.20 to $384.50, 30 cents below the 7-month high hit last week, bolstered by hopes that central banks would decide to maintain the level of transparency on their gold market activities attained in the original 1999 agreement.

It’s high up on the topic list for the gold market, so of course they are going to discuss it, Bernard Hunter, a vice president at bullion dealer ScotiaMocatta in Toronto, said after the close.

Spot bullion was last quoted at $381.60/2.30, up from $376.35/7.05 at Thursday’s close. London bullion dealers fixed the afternoon spot reference price at $379.75.

Gold has been tracking the euro’s ups and downs against the dollar. It got extra support Friday as the dollar/yen fell to a 2-1/2 year low. A weak greenback makes dollar-priced gold more affordable in foreign currencies.

While European finance officials suggested this week that gold will be discussed on the sidelines of the Dubai meeting, Friday’s statement by the unnamed G7 official was the first suggesting that the sales limits could be increased, if only in stages, as some had been betting.

The original pact helped lift gold from 20-year lows, by making central bank sales more predictable.

Economic data and swings in the currency market continue to give the market short-term direction, but the growing focus seems to be the Central Bank Gold Agreement with a renewal of the policy likely to give gold a boost despite the large long position held

by the specs/funds, analyst James Moore of TheBullionDesk.com wrote Friday.

December silver rose 2.7 cents to $5.292 an ounce, trading between $5.235 and $5.335.—Reuters