LONDON, June 22: Gold eased in Europe on Wednesday as the market digested this week’s run to a three-month high at $441 per ounce, with dealers confident that prices would attack fresh peaks in coming days.

Spot gold stood at $437.30/ 438.00 per troy ounce from $438.50/439.25 late in New York on Tuesday.

Currency fundamentals were not supportive, with the euro falling against the dollar as European rate cut speculation came back into focus following a dovish report from the Bank of England. The currency was last at $1.2141.

Dealers were still positive on bullion — citing the market’s ability to hold support on Tuesday as the euro struggled to stay above a nine-month low versus the dollar.

The market did a reasonable job yesterday in a negative environment, one dealer said.

We’ll probably see the dollar weaken and speculators could try for a high over $440, he added.

Dealers and analysts said, however, that the road back towards $440 and above would be muddy, with tough resistance seen along the way.

Gold remains overbought and some consolidation might be necessary, but whilst above this year’s downtrend a further test towards 445 cannot be ruled out, Julia Hamblett of Dresdner Kleinwort Wasserstein said in a daily report.

Gold has moved up steadily this month — gaining five percent to stand less than $10 away from March’s 2005 peak at $446.70.

The rise has been all the more significant as at times the market has diverged from its normal inverse relationship with the dollar/euro as fund buyers upped their exposure in the metal and other commodities.

Analysts said gold output and profits in South Africa, the world’s biggest gold producing country, may hinge on whether the metal has made a structural break from tracking currencies such as the dollar and the rand.—Reuters