LONDON, Feb 8: Gold held on to this week’s gains of over $20 in Europe on Friday, laying firm foundations for further price rises next week, traders said.

Bullion was fixed at $304.30 an ounce this afternoon in London, just under the morning’s $305.10, and culminating a breathtaking week of prices hitting two year highs.

“The temperature for gold has changed. It seems like there is a lot of new investment coming in. I think we can look to further gains next week,” one bullion trader said.

Much of the rise was due to buying by Japanese investors but dealers said a breach of key resistance levels on historic price charts could fuel increased speculative buying.

Traders saw resistance at $308, adding that if those levels are breached, $320 would be the next challenge for bullion.

Japanese savers, rattled by plans to end full state protection of bank deposits from April, have continued to flock to gold, trusting in bullion bars more than in banks.

One European trader said: “We’ve seen the Japanese continuing to buy a bit every day and the market is just very sensitive to the upside at the moment.”

Historically, gold has been seen as a safe haven in times of economic or political uncertainty. Prices reached all time highs of $850 a troy ounce in 1980 when Russia invaded Afghanistan.

The recent move above $300 an ounce has kept trade extremely volatile, as any dips have been rapidly bought up by market players keen to cover their short positions, which has then been offset by producer selling.—Reuters