Gold whipped in a $1 range either side of $664 as the US session drew to a close on Thursday.

Spot gold prices had earlier closed in London at $663.50 per ounce – their highest level in 3 weeks.

"The major trend is still upward for gold prices," says Dennis Gartman, editor of the eponymous Gartman Letter. Investment funds seem to agree.

The front-month contract in the futures market is now reaching expiry. Open interest shows speculators rolling their April contracts into June to maintain their paper position.

(Are the investment funds right to stick with gold? Click here for a technical view of the gold charts right now...)

Wall Street's ongoing interest in "paper gold" means that it's continuing to track the fortunes of stock prices, however.

Rising for the sixth session running, gold has now gained 2.7% from this time last week. Europe's top 300 shares, meantime, closed Thursday an average of 4% higher, led by financial stocks.

"The market is just telling us how much gold is linked to the rest of the markets nowadays. It's not operating on its own," says Jeremy East, head of metals trading at Standard Chartered.

Long-time gold bulls often claim gold moves in opposition to stock prices. This theory's not true, in fact – but the current reality has disappointed many novice observers, too. (You can get the facts here...)

"It's interesting to see whether the funds – and there are still large long positions – are rolling those contracts," says East, "and it looks like they are.

"That is positive for the market."

Also positive for gold is the outlook for US interest rates. Whilst holding again – or even cutting US rates – would prove bad news for Dollar savings accounts, it would encourage more people into gold.

The metal yields nothing, remember. So it takes low to miserable returns on Dollar investments after inflation, therefore, to make gold look attractive in comparison.

"The Fed wants to pretty much be vigilant on the inflation front," reckons Mark Simenstad, a manager at Thrivent Financial in Minneapolis, a $34 billion bond fund – "and they're saying that."

"We've been of the opinion that the Fed does nothing for the balance of this year," he told Bloomberg earlier.

But leaving US interest rates unchanged, however, also leaves them "accommodative" – just as they have been since the start of 2001.

Measured against US economic growth, in fact, US interest rates have now been "easy" for the longest run since the late '70s.

"The Fed is rolling the dice that diminishing growth rates will naturally pull inflation into the target zone," reckons Brian Varga, co-head of Treasury trading at Countrywide Securities in Calabasas, California.

With the subprime lending industry still tipping into freefall, the Fed might just get its wish. (Click here to read more on what the Fed can – and can't do – to fix the subprime collapse...)

In the short-term market for gold bullion, meantime, the coming month could see Asian demand rise strongly.

"India's religious festivals will add to the demand for gold alongside the next burst of marriage demand," says Julian Phillips of GoldForecaster.com, "where gold is traditionally given as a dowry to the marriage by the bride."

To learn more about India's impact on the global gold markets, click here now and read on...