19/06/07: Analyst - Dollar driving gold market

The price of gold is likely to remain steady this week, according to analysts.

The precious metal is currently trading at between $643 and $661 per ounce, and some believe the price is set to increase in the near future.

With the US dollar declining against the euro, more investors are willing to invest in gold as a hedge.

"The dollar is driving the gold market," Suki Cooper of Barclays told Thomson Financial. "In the medium term, we see gold continuing its upwards trend."

And the theory could be tested today, as US housing data is set to be released. The news may give an indication of possible moves from the Federal Reserve that may give the dollar a boost.

If the data is stronger-than-expected it could give the dollar a shot in the arm, but analysts believe any gain is likely to be small.

Meanwhile, Masanobu Ishikawa of Tokyo Forex suggested the US economy could be on the verge of a rebound.

"It doesn't look like dollar-long positions have been piling up significantly, so the risk of a sudden plunge may not be very high," he told the Associated Press.