LONDON, Oct 17: Gold steadied on Wednesday, staying within striking distance of a 28-year high, with firm oil prices and tensions in northern Iraq underpinning sentiment.

After an impressive rally that saw gold surging 20 per cent in two months to Tuesday’s peak of $766.60 an ounce, the highest since January 1980, the metal is vulnerable to a sell-off, but analysts said there was scope for further upward moves.

Gold is still attracting a lot of interest and we believe that there is some good potential for another test higher in the coming few days, said Frederic Panizzutti, precious metals analyst at MKS Finance.

Gold, traditionally seen as a safe-haven, is also expected to get support from tensions in the Middle East.

Turkey’s parliament was poised on Wednesday to grant its army permission to enter northern Iraq to crush Kurdish separatist rebels based there, but Iraqi leaders stepped up a diplomatic offensive to avert any attack.

If tensions between Turkey and Iraq in fact do subside, do not look for a complete reversal even though a good amount of the ‘war and oil’ premium will be extracted from the market, said Pradeep Unni, analyst at Vision Commodities in Dubai.

Gold spiked to a record high of $850 in January 1980 when investors bought the metal heavily on high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution.

In the physical market, gold jewellery exports from Turkey, one of the top three exporters, rose 21.6 per cent year-on-year to 71.4 tons in the first nine months of the year. Exports in September were up by 14.5 per cent to 9.6 tons.

In other markets, benchmark Tokyo gold futures for August delivery ended 51 yen per gram lower at 2,856 yen, while US gold futures rose, with December contract up $1.7 an ounce to $763.70 after trading as high as $769.80.

Platinum rose to $1,417/1,421 from $1,410/1,415 an ounce in New York. It hit a record high of $1,428 on Monday.—Reuters