Gold holds above $700, eyes 26-year high

Gold holds above $700, eyes 26-year high

Mon Sep 10, 2007 3:09 PM BST

By Atul Prakash

LONDON, Sept 10 (Reuters) - Gold traded above the key $700 level on Monday, within sight of a 16-month high, as a weaker dollar and bullion's safe-haven appeal attracted fresh buying.

The metal is closing in on a 26-year high of $730 an ounce hit in May last year and is roughly $145 below its all-time high of $850, fixed in London on January 21, 1980.

"Gold is set to remain strong around $700 as a pivot level. The currencies have enabled gold to take-off and the metal has now uncoupled from currencies. We are again running into a self-motivated trend where buying attracts buying," Frederic Panizzutti, metals analyst at MKS Finance, said.

"The move has been impressive and we might see some profit taking, but the market is definitely aiming (for) $720 as the next target. We expect the market to remain volatile in the coming days and would not be surprised to see another rally."

Spot gold <XAU=> touched an intraday peak of $706.60 before paring gains to $703.45/704.05 by 1403 GMT, still up from $699.90/700.70 quoted late in New York on Friday, when it rallied to its highest since mid-May 2006 at $707.10.

Friday's unexpectedly weaker U.S. non-farm payrolls data dented the dollar, making dollar-priced gold cheaper for holders of other currencies.