Gold hit a three-month high above $440 per ounce in Europe on Monday and was seen nearing a 2005 peak as investors upped their exposure to the precious metal. The market started to back off slightly in the afternoon, but dealers were confident of more gains as the metal had seen an undercurrent of fund buying on the back of last week's significant gains to seven-week highs.
"You can't stand in front of an express train...there's a head of steam building and standing in the way of it would be foolish," Peter Hillyard, head of European metal sales at ANZ bank, said.
Spot gold was quoted at $438.10/438.80 by 1452 GMT, up slightly from $438.00/438.70 in New York late on Friday. The market earlier hit an intraday peak of $441.00 - its highest since March 17. Gold priced in euros hit an all-time high at 361.97 euros.
"Gold has clearly been in an upward trend, and at some point the trend followers will take positions long in gold if that trend continues," a fund source said.
Other metals benefited from fresh investor interest, with copper moving to an all-time high and platinum hitting its highest since April 2004.
Dealers said the move was all the more significant as the market rose in defiance of normally unfavourable currency fundamentals, with the euro tumbling against the dollar.
The euro was approaching a nine-month low against the dollar after European Union leaders failed at the weekend to agree on a long-term budget. It was last at $1.2141.
A softer euro would tend to see non-US investors shy away from dollar-priced gold, but analysts said that did not necessarily mean that funds were switching significant volumes of cash out of currencies.
"This is a gold move - the fact that euro-denominated gold has moved up so much just reflects the relative strength of gold and relative weakness of the euro," UBS Investment Bank analyst John Reade said.
"Funds have taken a view that the price of gold in euros is going to go up and sure enough they've been right," SGCIB economist Stephen Briggs said.
"Metals are trivially small markets - if enough people decide the market is going to go up then it will go up."
Analysts say the average daily global trading volume in the gold market, at less than $10 billion, is equivalent to about 0.5 percent of average daily global foreign exchange trading volume.
Dealers and analysts said if the market could build on current momentum, $445 would probably be the next upside target, with the market then expected to consolidate before tackling this year's peak of $446.70 - last seen on March 11.
In other metals, platinum was feeling the benefit of gold's run higher. Platinum was fixed, or set, on Monday morning at $900 per ounce - a fresh 14-month high.
Spot platinum firmed to $896.00/900.00 from $892.00/897.00 on Friday in New York. Sister metal palladium was flat at $186.00/190.00.
"The broader environment of fund interest in commodities has helped platinum and what we've seen is renewed fund buying," HSBC metals analyst Alan Williamson said.
Silver got a brief boost - spiking to $7.43 on news that Barclays Capital was seeking regulatory approval for a silver exchange traded fund that would give investors the chance to buy a paper share in the metal.
Spot silver later drifted back to $7.27/7.30 from $7.34/7.37 on Friday.
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