Spot gold prices on Monday came within spitting distance of a four-week high against the US Dollar.

Buying or storing physical gold at the London open returned more than a 1% gain by late trade in New York.

The metal hit $664 per ounce, and also gained against all other major currencies, too.

For French and German investors, gold came within 50 cents of €500 per ounce.

"Oil and the Dollar are supporting gold," said Wolfgang Wrzesniok-Rossbach, head of metals sales at Heraeus, the Germany refinery, earlier in the day.

"Much is going to depend on the two factors, but gold is pretty well supported. Prices are fluctuating quite wildly these days, but the overall direction is up."

Gold rose today to regain its losses from late last week following US housing data that was also the exact mirror image of Friday's news.

Then the National Association of Realtors had said that sales of existing homes rose by 3.9% last month.

Just ahead of Monday's US open, however, the Commerce Dept. said that new home sales dropped 3.9% in Feb.

That knocked the Dollar down from $1.325 per Euro to $1.335 inside two hours.

By the close in London, gold rose more than 1%. (For more on the US housing crisis, click here now...)

"The strongest driver for gold at this point is oil," reckons Frank McGhee, head trader at Integrated Brokerage in Chicago.

Crude oil today rose above $64 per barrel in London, a four-month high, as the diplomatic row over 15 Royal Navy marines captured by Iran wore on.

Members of the United Nations security council also began to implement financial sanctions against Tehran's leaders.

"Unless we get a retracement in crude, both gold and silver will benefit," says McGhee.

Yet until the middle of last week, however, gold's fortunes were more clearly linked to the stock market.

Rising and falling together, both gold and global equities had become part of the 'Reflation Trade' begun in early 2003 by record-low interest rates across the developed world.

(Click here for a brief history lesson – plus the outlook for gold vs. paper money in 2007 and beyond...)

But gold today rose even as European stocks closed 0.9% down on the US housing data, failing to record a sixth consecutive gain.

The front-month contract on the gold futures market, on the other hand, rose $6.60 per ounce to hit $663.90 at the Comex.

Gold has now risen 4.1% so far this year.

Banking stocks were particularly hit by the US data on Monday. Automakers also ticked lower, led down by Volkswagen.

VW shares lost 3.2% on news that Porsche plans to offer the legal minimum to Volkswagen shareholders in what has become an obligatory takeover bid after raising its voting stake in the European auto giant.

In the currency markets, Sterling gained after UK housing data said residential prices rose 6.7% year-on-year this month – the fastest pace since June 2003.

Traders took that to mean a further hike in UK interest rates looks likely.

"There's been a lack of news and if nothing's going on people go for carry," said Adrian Schmidt, currency strategist at the Royal Bank of Scotland.

Not sure quite what "carry" is, who's doing it or why the global finance system has come to rely on it today?

Click here to learn more now...