Platinum also gained, but traded well below this week's record high of $1,395 an ounce on talk of an exchange traded fund (ETF). Other precious metals followed gold's upward move.
"The market is trying to get up to $640 an ounce at some point, but there are some sell orders around there," said a precious metals trader in London.
"The dollar is weak at the moment. The market is fairly thin so it didn't take a huge amount to move it up," he added.
Spot gold
Gold was helped by the euro, which shot above $1.31 for the first time since April 2005, extending sharp gains made this week as a combination of euro-positive factors finally triggered a break-out of long-established ranges.
Gold often moves in the opposite direction to the dollar and is generally seen as a hedge against inflation."This move in the dollar, if sustained, will see precious metals prices gain further ground," said a market report from UBS Investment Bank, which saw gold prices at $640 in one month and $670 in three months from now.Dealers said prices were vulnerable to wider fluctuations due to the lower numbers of players in the market. New York commodities and energy markets will remain closed on Friday for the Thanksgiving holiday, re-opening on Monday.
"Gold is gaining and $650 an ounce must be the target. But it wouldn't go there today because no one will dare to do that if there is no U.S. trading. It's too risky," said Matthew Turner, precious metals analyst at Virtual Metals in London.
In other precious metals, spot platinum
Dealers said the metal had potential to gain on positive fundamentals. The market is expected to remain in deficit in 2006 for the eight year in a row.
Talk of an ETF could resurface again, prompting speculators to build fresh positions, dealers added.
Silver
