Spot gold prices opened Wednesday's European session above $678 per ounce, a new 6-week opening high.

"I think gold will consolidate around this level before recharging again, with the Dollar not performing so well," says Ronald Leung, head of Lee Cheong Gold Dealers in Hong Kong.

"It could re-test $680 in coming days." (Click here for the longer term supply/demand dynamics set to drive gold prices higher...)

With the Dollar weakening, however, gold prices pulled back overnight for non-US investors.

For British investors looking to buy gold, the metal slipped to £342 per ounce at one point, down from its 6-week high of £345 hit early in New York on Tuesday.

Versus the Euro, gold pulled back to open Wednesday in Frankfurt at €504 per ounce, down 0.6% from late Tuesday.

And for Swiss buyers, the gold price slipped to open in Zurich CHF 825, down from Tuesday's six-week top above CHF 829.

Traders and analysts point to the growing trade dispute between China and the US for the current weakness in the Dollar.

"If trade disputes between the two largest trading nations and economies in the world escalate," says James Steel, an analyst at HSBC in the US, "then the prospect of uneasy relations could generate sufficient financial market anxiety to strengthen gold prices."

Yesterday, the US filed two complaints with the World Trade Organization, accusing China of rampant piracy of copyrighted movies, music, software and books.

Short-term, however, gold looks unlikely to spike higher on the back of US-Chinese tensions alone. (Click here for why...)

In the currency markets, new-found strength in the Euro pushed Sterling to a 3-week low. The Dollar recovered slightly overnight from its two-year low of $1.3457 to the Euro.

"There are also concerns about Euro/Yen getting too high before this weekend's G7 meeting," adds one US brokerage.

"The cross is at ¥160 after all" – a new record high for the Euro.

"There are not a lot of reasons not to buy Euro/Yen," the brokerage goes on. "Euro fundamentals are solid, and the rate differential is always going to be a incentive to buy the pair."

The European Central Bank is expected to keep its interest rate on hold when it announces April policy tomorrow. The ECB hiked to 3.75% in March.

Inflation in the cost of living across the Eurozone has now pulled back to 1.9% annualized from last year's peak above 2.5%.

But the ECB is mandated to target inflation in the money supply – and that's been growing by 10% year-on-year, its fastest rate of expansion since the introduction of the single currency in 1999.

How can the Euro rise when its supply is surging like this? For more on the trouble caused by low interest rates worldwide – and what this problem's likely to mean for gold prices – click here and read on...