Gold is on track to reach its highest since June 1988 as fund money pours back into the market, triggered by dollar weakness and high oil prices, traders said on Friday.
But the market was looking more volatile at such rarified levels, leading to choppy afternoon trade that saw more than one percent sliced off prices before they reversed again.
"It's pretty brutal out there," one trader said, noting volumes had dwindled sharply in the afternoon, exaggerating price moves.
Bullion surprised many on Thursday when it jumped by more than two percent. The market then paused in Asia trade, before moving up a gear in early European business to strike a fresh eight-month peak at $449.30 an ounce.
Gold touched its highest since mid-1988 when it peaked at $456.75 in early December and had made three unsuccessful attempts at that level so far this year.
By 1421 GMT spot gold was at $446.90/447.60, still up from New York's late quoted $445.30/446.10.
"It is all very thin...But with the weak dollar and oil price high, they (bulls) are keen to press home their advantage," another trader said.
"If they can get it over $450, then we can go to $455 very quickly and the highs from last year."
The trader said he was very wary of current price levels.
Dealers also noted gold jumped in euro terms, breaking back to 360 euros for the first time since early July.
The euro was choppy, rising earlier to its highest in more than two months at $1.2481 before tumbling back to $1.2384 and then partially retracing up to $1.2417 by 1429 GMT.
"Gold seems poised to move higher over the very short term. Markets will remain volatile and trade erratically," Frederic Panizzuti of MKS Finance said.
"Any US dollar buying could prevent gold from breaking over the $450 key psychological target."
High crude oil prices have put inflationary pressures back at the fore among investors, who often consider hard assets as a way of protecting money from the corrosive effects of inflation.
Oil prices raced to record highs above $66 a barrel on Friday as investors fretted over the world's strained capacity to refine and pump crude oil.
Gold's buoyant tone earlier spilled into platinum, which hit a fresh 15-month high at $923. Spot was last at $913.00/918.00 versus New York's $912.00/916.00.
Silver shunned the uptrend and fell back to $7.08/7.11 from $7.15/7.18, while palladium was at $186.00/190.00 from $185.00/190.00.
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