Gold hits one-month high

Gold rose to its highest level in more than one month on Wednesday on a weak US dollar and dealers said the metal was gaining momentum to hit new highs. Spot gold hit a high of $665.90 an ounce and was quoted at $664.95/665.55 against $662.85/663.45 late in New York on Tuesday.

Gold could soon see another surge of speculative interest, should the dollar fall below key chart support, said James Moore, precious metals analyst at TheBullionDesk.com.

The dollar struck a record low versus the euro and a 26-year trough against sterling, weighed down by fears that US high-risk credit woes could spread to the wider economy.

Gold has rebounded around four percent since falling to its lowest level in more than three months at $638.90 on June 27, when commodities were hit by the latest wave of risk aversion in global financial markets.

Given the momentum, it would be likely for gold to engineer a move higher and eventually close above the 100-day moving average, which would suggest further strength is sustainable, Standard Bank said in a report.

The metal's 100-day moving average was $663.88 on Wednesday.

Additional buying in gold also comes from the strong support around the $650 level. Every time gold slips below $650, physical demand is seen to creep in, said Pradeep Unni, an analyst at Vision Commodity Services in Dubai. This has been a trend for the last four months, he said.

A move by Newmont Mining Corp., the world's second biggest gold producer, to eliminate its entire 1.85 million-ounce gold hedge position was also bullish for the market, said Yukuji Sonoda, precious metals analyst at Daiichi Commodities.

On Tuesday, Federal Reserve Chairman Ben Bernanke said that swings in volatile energy and food prices will have minimal impact on inflation as long as expectations of future price gains are held steady.

In other precious metals, platinum rose to $1,306/1,310 an ounce from $1,294/1,301 in New York on Tuesday, when it hit a one-month high of $1,307.80 ounce.

Silver hit a two-week high of $12.99 ounce before easing to $12.94/12.98 an ounce, still higher than $12.88/12.93 late in the US market.