London: Gold held near $1,140 an ounce (Dh4,183) in Europe yesterday as the upward momentum which has lifted prices more than nine per cent this month was kept in check by a recovery in the dollar.
Spot gold was bid at $1,140.90 an ounce at 1120 GMT, against $1,143.50 late in New York on Thursday. US gold futures for December delivery on the Comex division of the New York Mercantile Exchange dipped 30 cents to $1,141.60.
But the metal could be poised to break out to new highs if the dollar's recovery falters, analysts said.
"At the moment it looks like gold is awaiting the next big clue for a further push beyond $1,154, as current fundamentals seem to have been totally factored into the price," said Pradeep Unni, senior analyst at Richcomm Global Services.
"The dollar index is hovering above the 75 zone and that strength is keeping the lid on gains," he added.
"(But) the current uptrend is pretty much intact and the dips are likely to be once again used as fresh buying opportunities."
The dollar index firmed 0.33 per cent yesterday as investors pared back riskier assets, weighing on higher-yielding currencies such as the Australian dollar.
Usually strength in the US unit weighs on gold, as it cuts its appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
However, gold has enough support from investment interest and technical momentum to overcome this pressure, analysts said.
"Normally gold has an inverse relationship with the dollar," said JP Morgan in a note. "However, when fundamentals make gold more attractive, it overcomes its normal relationship. Don't be surprised if gold is strong even on a modest dollar bounce."
