Gold Eyes New High for 2010 as Dollar Falls vs. Euro

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"Gold has gained nearly 4% so far this year. . ."

Gold futures rose Wednesday but came off earlier highs, playing off the euro's gains against the dollar that made the precious metal more attractive as an investment alternative.

Gold for April delivery rose $5.10, or 0.5%, to $1,142.70/oz.

It earlier rose as high as $1,144.40, the loftiest level since Jan. 11, when it closed at $1,151.40/oz., the high for 2010.

In foreign-exchange dealings, the dollar fell against the euro after Greece outlined further austerity measures to rein in its deficit. The euro climbed to $1.3721, up from $1.3608 in North American trading late Tuesday.

Analysts also noted that SPDR Gold Trust (GLD 111.98, +0.96, +0.87%), the largest ETF backed by the metal, posted inflows for the first time in two weeks on Tuesday. The fund said it raised its holdings by 4.6 tons to a total of 1,111.6 tons. See SPDR Gold Trust data.

"Alongside the currently robust jewelry demand from India and the high interest of speculative financial investors, ETF demand could also support the gold price in holding up against the firm U.S. dollar and in advancing toward the $1,200/oz. mark," said analysts at Commerzbank.

Still, from current levels, gold will face technical resistance around $1,146 and again at $1,162/oz., analysts at TheBullionDesk.com wrote in a note.

Silver may also benefit from the improved outlook for gold, said James Moore, an analyst at the firm.

With silver viewed as a less expensive alternative to gold and with fund exposure to silver at a "relatively low level," Moore said it's "well placed for more substantial gains."

Silver for May delivery, the most active contract, rose 1.3% to $17.28/oz.

Gold has gained nearly 4% so far this year, while silver has roughly 1.3%.

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