Gold rose right through the Asian session today, regaining Monday's New York highs and then breaking $652 per ounce as Europe opened for business.

Versus the Euro, gold ticked up to a four-day high, breaking €504 per ounce. But a strong Pound dented British investors' overnight gains in Asia.

Gold opened London at £332.20 per ounce, just shy of its high from Monday.

What will Tuesday bring? "Unless we clearly break the recent high of $660 and close above that, it just continues to be a wide range trading trend between $640 and $650," reckons a dealer at Scotia Mocatta in Hong Kong.

"It will just follow oil," he says, adding that physical buyers in Asia are also waiting for a price dip before buying again.

"[The price] is not low enough...not until we dip below $640."

Physical buying by Asian jewelers has evaporated since gold broke above $645 according to newswire reports. Another dealer in Hong Kong said earlier that today's buying in Japan was "purely speculative".

Gold priced in Yen has also risen, but it's suffering as the Japanese currency rebounds from its multi-year lows of last week.

Even after today's rise in Tokyo trade, the metal has dropped 1.2% from last Friday's 9-month high.

The Yen extended its gains overnight on short-covering, reports Reuters, driven by this week's impending G7 meeting of finance leaders in Essen, Germany.

Japan's weak currency is expected to top their agenda. Both European and US politicians worry that the Yen is being manipulated by the Tokyo government to keep Japanese exports cheap.

Currency speculators, meanwhile, built up a record "short" position in the Yen last week. Each rally in the Yen will force some of those "short" to quit their trades, pushing the currency higher again.

Short-covering is driving a portion of gold's current gains too, according to Brandon Lloyd, an analyst in Sydney. But the technical action on his charts suggests gold may be due a pullback.

"Short covering toward the [Monday] close on crude's 3% rally to $59.02 close lifted gold to its $646 settlement," he says in today's Mitsui report. "The recent break through the $655 triple top & Friday's failure to test the previous high can be argued as a signal for buyer exhaustion...

"Whilst sentiment still remains firm, if gold breaks below $641 spot support then a clean out should ensue."

Longer-term, however, sentiment towards gold is only gaining ground – as a hedge against inflation, the ongoing threat of further conflict in the Middle East, and the fast-weakening US economy.

For a full analysis of what's wrong with America's household and corporate balancesheets today, click here for the latest view from Dr.Kurt Richebächer...