LONDON, June 9: Gold rose to its highest level since late May on Monday as the dollar hit a six-week low against the euro, fuelling buying of the precious metal as a currency hedge.

Gold touched an intraday high of $908.70 an ounce, its strongest level since May 28, before slipping back to 906.20/907.20 at 1023 GMT, up from $896.80/898.20 late in New York on Friday.

Gold traders are closely monitoring movements on the foreign exchange markets, with sentiment cautious after last week’s fluctuations.

Platinum also posted gains, rising to its highest level in almost two weeks as it tracked gold higher and amid supply concerns from major producer South Africa.

Investors are turning to precious metals amid fears the dollar may have further to weaken after poor US data last week, analysts said.

A lot of the pullback in commodities was based on the view that the dollar was getting quite close its weakest point (but) suddenly there has been some more poor data, said Numis Securities analyst Simon Toyne.

The euro meanwhile is benefiting from European Central Bank president Jean-Claude Trichet’s suggestion last week that euro zone rates are likely to be raised.

But oil prices, which also helped drive gold higher on Friday as they rose to new records, are easing this morning as traders take profits after Friday’s record high, lessening support for gold.

The precious metal tends to move in line with crude prices, as it is bought as a hedge against oil-led inflation.

But overall gold traders are likely to continue to take heir cues from the foreign exchange markets, analysts said, with sentiment still cautious ahead of a raft of US data this week.

Platinum meanwhile was steady after touching its highest level in almost two weeks earlier on Monday.

South Africa is the world’s biggest producer of platinum, supplying some four out of every five ounces consumed each year.

Spot platinum was steady at $2,059.50/2,079.50 against $2,064/2,084 in late New York trade Friday.

Silver was little changed at $17.55/17.60 against $17.51/17.57, while palladium rose to $430.50.00/440.50 an ounce from $429.00/437.00.—Reuters