Spot gold traded as high as $641.90/oz on Monday and could head towards the $700/oz level again if the dollar continues to weaken against the euro.

This is according to Gregor Krall, technical analyst from BOE Private Clients, who says the euro has broken its seven-month range and is now targeting a level of $1.36.

This is favourable for gold both as an alternative investment and because it becomes cheaper in other currencies.

"The most recent move above $636.50 validates a reverse head and shoulder formation with an upside target just above $700," Krall told I-Net Bridge, "with an initial target at $660/oz."

The euro and the pound surged against the dollar recently after comments by the deputy governor of the People's Bank of China coupled with concerns about the US economy caused selling in the US currency.

US holidays have induced thin liquidity in the market, which has contributed to the sharp gains.

By 1.49pm on Monday, the price of gold was up $1.10/oz at $639.10/oz. The yellow metal is up over $80/oz or 14 percent since it hit a more than three month low of $558.10/oz on 4 October.

The euro was bid at $1.3118 from $1.3156 late on Friday, while the near-dated Brent crude contract was quoted at $59.85 a barrel from Friday's $60.03.

Platinum was quoted at $1185/oz from Friday's close of $1187.50/oz. Palladium was quoted at $328.50/oz, up $3.50 from its overnight close.