LONDON, Aug 4: Gold drifted lower in thin volumes in Europe on Thursday closely following the euro’s performance, but an upturn in the single currency could take bullion prices towards $440 an ounce, traders and analysts said. Spot gold was at $436.10/ 436.90 a troy ounce, slightly down from New York’s late quote on Wednesday at $436.35/ 437.05. Prices earlier hit a fresh four-week high at $437.20.

We’re following the euro almost tick for tick. It’s very quiet, one trader said, adding the market was waiting to see what funds would do when New York gold futures open later on. If we can close above $436, then $440 is a definite target to try in the next few days.

Gold rose as high as $443.60 in June, which was its third failed attempt to climb back to a 16-1/2-year peak scored late last year at $456.75. Analysts said the euro would need to move back up towards the $1.2440 level in order to trigger a corresponding move in bullion back to $440.

John Reade, analyst at UBS Investment Bank, said he had revised up his one and three month forecasts for gold to $445 an ounce. There is still more room for speculators to buy gold on the back of a weakening dollar, hence the reason for the increase to our short-term forecasts, Reade said in a report. The market continued to keep half an eye on a potential strike by gold mineworkers in top producer South Africa.—Reuters