LONDON, April 5: Gold traded on Thursday near a five-week high, with positive sentiment overriding easing tensions in the Middle East as Iran released British soldiers and marines.

Traders said gold would be supported by a steady dollar and slightly firmer oil prices, and a large sell-off was unlikely ahead of the Easter holiday.

Gold seemed to ignore Iran when it was bad and ignores Iran when it's better, said Jon Bergtheil, global metals strategist at J.P. Morgan.

We prefer to be in gold right now than base metals. We are positive and see gold at $725 by the beginning of the next year, he said, adding a positive outlook by GMFS also helped.

Precious metals consultant GFMS Ltd said on Wednesday that gold prices would set a record high this year in terms of their annual average and may scale new absolute peaks on a weaker dollar outlook, a slowdown in the US economy and geopolitical tensions.

While the release of the UK hostages may lead to some safe-haven reduction, gold should now find sufficient momentum of its own as speculative players appear more confident at increasing their risk exposure, it said in a report. In other precious metals, platinum rose to a five-week high of $1,250 an ounce before easing to $1,249/1,252, against $1,245/1,250 in New York.

Silver edged down to $13.56/13.61 an ounce from $13.60/13.63, while palladium gained to $352/355 from $348/351 an ounce.—Reuters