LONDON, Dec 29: Gold crept up to a fresh near eight-year high when the market re-opened in Europe on Monday as the dollar plumbed new lows against the euro, but subsequently retreated as the buying dried up.

Dealers said they were not expecting the market to budge far from current levels until next week when more participants would return after New Year celebrations.

“One shouldn’t overstate today’s movements. Liquidity is thin. The picture should clear up next week when traders return to their desks,” a Germany-based trader said.

Traders noted some light buying earlier in the day as the euro moved to new highs above $1.25 against the dollar, but said that gold ran into selling around $415 an ounce.

The German dealer said gold would probably need another round of euro buying to take it to fresh highs.

Spot gold was quoted at $413.00/413.50 by 1610 GMT, having earlier touched $415.40 — its highest level since early February 1996. That compared with New York’s close on December 24 at $411.65/412.35.

Analysts and traders expected the precious metal to keep within a $412-415 trading band over the next few days, with dollar/euro movements seen directing the market.

“Resistance ahead of $415 should keep the metal capped till the New Year although some of the larger COMEX speculative players may take advantage of the thin conditions to bully the market higher,” James Moore of TheBullionDesk.com said in a daily report.

Gold has gained some 18 per cent so far this year and is now only $3 away from its 1996 peak at $417.70. A breach of that level would take bullion to its highest in 13 years.

Dollar weakness would continue to support the price of gold, making it cheaper for holders of other currencies.—Reuters