Gold pulled back ahead of the US open today after hitting $677 overnight in Asia.

"While the past sessions have seen the yellow metal surrender some $20 from recent highs," said a note from Standard Bank earlier, "fundamentally it remains positive.

"Gold steadily gained 2.6% in February and more than 5% since the start of 2007."

Tensions over Iran's nuclear program continue to figure in many analysts' notes. Washington has dismissed the idea of bilateral talks with Tehran.

"Going forward, gold should continue to find support from geopolitical tensions," says Barclays Capital in London.

"Growing geopolitical tensions continue to build a solid basis for gold to survive the current clean out," agrees Brandon Lloyd for Mitsui in Sydney.

That could "provide enough stimulus for it to re-test last years $730 high," he says today.

Crude oil prices, however, are failing to rise as UN sanctions against Iran become more likely, slipping back today from Wednesday's 9-week highs of $61.79 per barrel.

"Fundamentally, nothing much has changed for gold, the geopolitical tensions remain," says Darren Heathcote at Investec in Australia. "If anything it is a safe haven.

"I think the expectations are it will head toward the highs of yesterday, around the $679 level again."

Beyond the noise of today's action, meantime, the GFMS consultancy reports that gold de-hedging by mining companies continued to slow at the end of 2006.

Barrick Gold, the world's largest gold-mining firm, was the biggest de-hedger, cutting its outstanding sales in the futures market by 1 million ounces between Oct. and Dec.

(Why would a gold miner need to "de-hedge" gold sales in the futures market? Click here for the full story...)

Overall, de-hedging slipped to 1.12 million ounces in the fourth quarter, a 3% drop from the summer. And just as gold mining companies are slowly buying back the gold they sold forward during the '90s gold bear market, so central banks in Europe are slowing the rate at which they sell gold onto the open market.

Could the arch-bears of the '80s and '90s finally realize that gold is now in a bull market? South Africa bought 20 tonnes of the metal for its currency reserves last month (learn more here...)

Now the European Central Bank (ECB) says that one central bank – so far, anonymous – sold 2.4 tonnes of gold last week. That put total ECB sales below their weekly average for the last 12 months, according to analysts at Barclays Capital.

For the full story on central banks and gold in 2007, click here now...