Gold rose strongly in Europe today as speculators, already drawn by the metal's appeal as an alternative investment, took the market tantalisingly close to peaks not seen since bullion's fashionable period in February before the war in Iraq.
A weaker dollar proved to be the catalyst for moving up to fresh seven-month peaks over $380.00 an ounce, as nagging doubts about the strength of any global economic recovery reoccurred.
In other precious metals, silver and palladium also grabbed attention, with increased speculative interest helping both to impressive gains.
The dollar slipped against both the euro and the yen, making dollar-denominated bullion a better buy for holders of those currencies, while softer stock markets raised the metal's profile as an alternative investment.
Bullion stayed firm after matching last week's seven month high in Asian trading at $379.00 an ounce, before European and early US buying pushed the price on to a high of $383.00 - just a few dollars away from the February 5th peak at $388.50, which was then a 6-1/2 year high.
Political tension also contributed, two days before the second anniversary of terror attacks in New York and Washington and after the British Embassy in Iran said three or four shots were fired at or near its building today.
Fund buyers have been piling into gold recently, encouraged by a weak dollar, tumbling bond prices and potentially destabilising tension in the Middle East.
Analysts have been wary of the massive long position looming over the market, with the potential to spark a mass exodus from the metal, but some were beginning to ease back on those fears, accepting that the market could probably live with the speculative exposure in its current mood.
In other precious metals, silver steamed higher on the back of gold, with the price zooming past a 3-1/2 year peak matched in July, but analysts said the move was purely speculative and likely to be short lived. Spot silver was last at $5.23/25 an ounce, its highest since February 2000, from 5.07/09 late on Monday in New York.