LONDON, Jan 5: Gold started the first week of 2004 as it ended 2003 - charging to its highest since February 1990 as the dollar crumbled against the euro and the yen and speculative funds maintained their appetite for precious metals.

Spot gold was at $420.75/ 421.45 an ounce at 1447 GMT, well up from $416.25/416.75 at European opening and what had been a long-standing objective at $417.70.

"The precious metals are all off to the races - they are all up on the US opening," analyst Kamal Naqvi of Barclays Capital said. New York futures markets re-opened for the first time since December 31 on Monday, and all the precious metals leapt higher. Silver jumped to its highest since April 1998, while platinum rose some $20.

Bullion peaked at $422.20, and analysts said they expected the metal to notch up further gains given voracious fund purchasing, the trends on foreign exchanges and gold's close inverse relationship with the dollar.

Analysts said gold could touch $450, the highest in 16 years, because of dollar weakness, fears of fresh attacks on the United States and persistent violence in Iraq.

Naqvi said the important CTAs (commodity trade advisors) would be looking to continue acquiring commodities, and that fresh funds would flow into the sector early in 2004.-

The dollar fell to a three-year low against the yen, slipping below 106.50 as broad selling took it through key technical support.

The dollar was under pressure as comments by Federal Reserve governor Ben Bernanke reinforced a view that US interest rates will stay low for some time. The dollar traded at a low of 106.48 yen, while against the euro it had dropped to $1.2695 on persistent worries about a widening US current account deficit.

"With analysts predicting a test of $1.30 in the euro by the end of the month further gains in gold seem likely," James Moore of TheBullionDesk.com said.

Although the market is looking over-extended on technical charts after breaking through two key levels on Monday the 1990 peak is within range. "You have to say that $424.50 is the next target," Naqvi said. Beyond that, prices would be back at levels last seen in 1988.-Reuters