Gold held steady in Europe today ahead of the US open after hitting fresh 7-month highs above $669 per ounce early in Asia.

Against both the Swiss Franc and Canadian Dollar, gold is now nearing its multi-decade highs of May '06. Versus the Japanese Yen, gold has broken up to trade at a 23-year high above ¥81,500 per ounce.

But thanks to moves in the currency markets, this week's fresh rise in the gold price so far has yet to affect British or Eurozone buyers.

By lunchtime in London, gold priced in Sterling remained just shy of £342. By mid-afternoon in Frankfurt, it cost €512 per ounce.

"We've seen a lot of risk aversion buying over the last couple of months," reckons John Reade, metals analyst at UBS Investment Bank. "Many investors are concerned about the Middle East, probably more so than they have been for a while."

"I am cautious here," he adds. "We've seen a lot of money come in...At some stage I would expect a bit of a pullback."

David Holmes, director of precious metals at Dresdner Kleinwort Wasserstein, agrees that a pullback is becoming more likely.

"$700 is clearly within sights. The question is whether we have a bit of a pullback first and consolidation to build a base at these higher numbers...

"I suspect that's on the cards."

For US investors, gold is now trading more than $20 up from this time last week. Yet the usual drivers cited by precious metals analysts – a weaker Dollar and rising oil prices – have so far yet to show up.

The Dollar today has pushed the Euro back below $1.300. Sterling has retreated below $1.945 – down three cents from Tuesday last week.

Crude prices, meantime, have sunk on rumors that Opec oil supplies will be enough to meet increased demand in the US following the current cold snap.

"The cold weather in North America has lasted longer than expected," said one Zurich-based energy analyst to Bloomberg earlier. "Supply in oil-production countries was reduced last month, but by less than expected."

All told, however, traders put oil $1 lower at the opening in New York today, down below $59 per barrel. Whereas for gold, "support is now anticipated at $656," says the Monex report – "then $635, and then $622. Resistance anticipated at $669, then $682, and then $693."

Gold has now climbed 10% from the dip to $605 it hit at the start of Jan. From 12 months ago, the metal is trading nearly 20% higher.

"The growing tension between US & Iran & fresh fund buy interest prompted a technical breakout on Friday," says Brandon Lloyd for Mitsui in Sydney.

"There is nothing to suggest that gold won't test the $675 spot target this week & given the nature of its current trading pattern, the next upside objective is set at last year's $728 high."

Today's move came despite Tokyo being shut for the "national foundation" holiday. Private investors in Japan have recently built up a record "long" position in gold, the greatest in more than 20 years.

"We might see more of a reaction tomorrow when Tocom reopens [tomorrow]," Darren Heathcote of Investec Australia said earlier to Reuters.

"Certainly, gold is technically looking strong. I see no reason why, at this present moment, we wouldn't want to head north again to test recent highs."

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