The gold price was heading for a close above $630/oz on Friday, the last trading day of calendar 2006.

The precious metal has been heading upwards since it bottomed at $611.30/oz eleven days ago, helped by recent tensions between Iran and the Western World and thin end of year markets.

"Having broken through key chart levels at $630, further gains could be in store for gold should it be able to hold above $630 and position for a break higher in the New Year," said a daily note from Standard Bank in London.

Overall, gold was relatively flat at $635.03/oz by 13:21 on Friday, ignoring a strong dollar that continues to remain under $1.32 against the euro, following the release of favourable US economic data on Thursday afternoon.

So far this December the gold price has retraced from $648.20/oz at the start of the month to as low as $611.30 by the middle of December and back up to its current price above $630/oz.

Standard Bank says there is potential for further upside in the price of the yellow metal. "Suspected funds re-positioning for the coming year after its recent corrective phase would also likely provide support in the interim. Resistance is now likely pegged around $640 with support at $624," said the bank.

The dollar was last at $1.3166 against the euro, compared to $1.3148 late on Thursday.

Platinum was up $7/oz at $1 117.50/oz, while palladium was quoted at $327.50/oz, up $6.50/oz from its previous close.

This 3 month chart of the gold ETF (GLD) shows the 50 day moving average recently crossing the 200 day moving average. This is often a very bullish signal and may indicate a rally in gold prices in the coming sessions.

Analyst John C Tumazos of Prudential Financial maintains his "overweight" rating on Freeport McMoRan Copper & Gold. The target price is set to $82.

In a research note published yesterday, the analyst mentions that despite the company’s $18 billion bank financing deal being valued at $2.00 per pound copper, the deal is likely to go through due to the financial community’s faith in the various Freeport-McMoRan companies as well as the reputation of the company’s CEO. The deal appears inevitable, given the expectation of the deal generating more than $2 billion in fees as well as the fact that the company accounted for more than half of all banking fees in the sector in the mid 1990's, the analyst adds.

In a move to attract small private investors, China on Monday lowered the trading threshold at the Shanghai Gold Exchange (SGE) from one kilogram to 100 grams.

SGE sources said 100-gram gold bars, which debuted on Monday at an initial price of 160 yuan (20.5 US dollars) per gram, started spot trading at an opening price of 157 yuan per gram and then remained flat for the entire trading session, closing at 157 yuan per gram, a drop of three yuan.

During Monday's trading, only 0.4 kg or four gold bars of this type changed hands, and transactions amounted to only 62,800 yuan.

However, business was brisk for other types of gold. 2,359 kg of two other conventional types of gold were traded and 1,506 kg of gold listed for trading delay.

An SGE spokesman blamed the poor market performance of the newly premiered 100-gram gold bars on a the Christmas holiday season.

Industry experts still believe China's latest move will help diversify gold investment channels in the country and standardize the market for gold transactions.

In July last year the SGE proposed spot trading of gold by private investors in cooperation with the Industrial and Commercial Bank of China (ICBC). However, the one-kg 160,000 yuan (20,000 US dollars) threshold turned off many private investors.

The volume of spot transactions by private investors in the first ten months accounted for just 0.57 per cent of total trading.

Gold held steady in thin trade on Friday, with many dealers already away for Christmas holidays, and the metal was likely to trade in a narrow range during the session ahead of a slew of US economic data.

Spot gold hit an intraday high of $619.40 an ounce and was at $618.70/619.70 by 04:03 GMT, steady near the $618.20/619.20 seen in late New York trade on Thursday.

Gold dropped more than $3 in the US market after falling crude oil prices triggered liquidation.

If the price stays around the current level, gold would end the year with a gain of around 20% but would still be some way off its peak in May of $730, its highest in 26 years.

"It's going to be a half-day in my office today. The trading range will be the same at $610 to $650 until the end of the year, although I also see a chance for gold to fall to $608 because of the thin trading," said a dealer in Singapore.

In Tokyo, benchmark gold futures on the Tokyo Commodity Exchange fell ¥11 per gram to ¥2 377, tracking declines in New York's Comex market.

Japanese retail invetors are cautious ahead of the Bank of Japan's policy meeting on interest rates in mid-January, while recent gains in Nikkei average have encouraged some investors to shift their money into the stock market, said dealers.

Puchases from Japanese investors helped gold reach multi-year highs this year.

"At this moment, people don't show any interest in commodities, not only in gold," said Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo, referring to a sell-off in base metals.

"Individual investors only show keen interest in the stock market," said Sonoda who expected gold to trade in a $620 to $625 range next week.

The dollar was little changed at ¥118.35 - off a six-week high of ¥118.53 hit on Thursday. The euro edged up to $1.3188 from around $1.3175.

Dealers are waiting for a fresh dose of US economic data on personal consumption, durable goods orders and consumer sentiment. The data may offer more clues on whether the Federal Reserve will start to trim interest rates next year.

Silver edged up to $12.41/12.48 an ounce from $12.35/12.42 an ounce in New York.

Platinum rose to $1 120/1 125 an ounce from $1 117/1 122. Dealers said the metal may trade in $1 120 to $1 130 an ounce range next week.

Palladium fell to $323/328 an ounce from $326/329 an ounce late in New York.

Gold trading was mixed on Thursday ahead of the release of key US data, which may offer clues as to whether the US Federal Reserve will cut interest rates next year and determine the metal's direction.

Trading was thin ahead of the year-end holidays, making gold prone to sharp fluctuations. Trading range was seen at $610 to $650 until the end of the year, according to some dealers.

"With fund managers looking to balance their accounts, do some window dressing before the end of the year, there is the potential for a few wobbles in things like the US dollar and the oil price," said a dealer in Sydney.

"That should be reflected in the gold price as well," he said.

Spot gold hit a bid high of $621.30 ounce, still down slightly from $621.70/623.20 an ounce late in New York on Wednesday. It had fallen to as low as $619.60 on Thursday.

"Many analysts expect gold to continue to remain within a narrow range going into year-end with market conditions remaining illiquid," said Investec Australia in a daily report.

"However, this should not be taken as a given, as relatively small volumes have the ability to move the market substantially during these illiquid periods," said Investec, which pegged support around $615 an ounce.

Benchmark gold futures on the Tokyo Commodity Exchange, currently December 2007, rose ¥2 per gram to ¥2 392.

The dollar held steady ahead of the release of the final reading of US third-quarter gross domestic product at 13:30 GMT and the Philadelphia Federal Reserve's manufacturing survey for December at 17:00 GMT.

The euro inched up to $1.3188. The dollar edged down to ¥118.35 but was within sight of a six-week high of ¥118.52 hit in the previous session.

Dealers said the data could help the market to better assess whether the Fed will cut rates in 2007. Lower US interest rates lessen the opportunity cost to investors of holding zero-yielding gold.

In other precious metals, silver edged down to $12.51/12.58 an ounce from $12.52/12.59 an ounce in New York.

Platinum rose to $1 121/1 126 an ounce from $1 118/1 126 an ounce and off Monday's low of $1 093 - the metal's lowest level since early November.

Chinese jewellery makers bought platinum at lower levels this week but retail investors, especially those in Japan, remained cautious after talk about the launch of an exchange-traded fund turned out to be unfounded.

"People are still afraid to buy platinum at this moment. But once the shock caused by the ETF talk is over, they will come back," said a dealer in Tokyo.

"I personally think we should rebound to $1,150 by the end of the year," said the dealer, referring to a level last seen in early December.

Rumours about the ETF launch propelled platinum to a record high of $1 395 an ounce in late November.

Palladium was barely changed at $323/328 an ounce.

Gold Fields, the world's fourth largest gold producer, has extended its offer to Western Areas shareholders by almost a month.

The new closing date of the all paper offer has been moved to lunchtime on Friday, 26 January next year from the previous closing data of 29 December.

Gold Fields said last week that it owned and had received acceptances representing 82 percent of Western Areas shares.

Gold Fields says it needs 94.1 percent of Western Areas to invoke Section 440k of the Companies Act, which allows it to "squeeze out" minority shareholders.

'Fund South Deep'

The company recently said shareholders must accept the offer or face the prospect of partially funding the South Deep mine's capital expenditure.

"Accordingly in the event that Gold Fields does not acquire 100 percent of Western Areas, the remaining shareholders of Western Areas would be asked to fund these cash requirements."

Harmony Gold and the Public Investment Corporation have already accepted the offer of 35 Gold Fields shares for every 100 Western Areas shares held.

Gold for immediate delivery rose as much as $1.13, or 0.2 percent, to $617.38 an ounce. It traded at $616.35 an ounce at 11:23 a.m. Mumbai time.

Bullion for February 2007 delivery rose $1.70, or 0.28 percent, to $619.60 an ounce on the Comex division of the New York Mercantile Exchange in after-hours electronic trading at 11:30 a.m. Mumbai time.

Gold for October 2007 delivery fell 6 yen, or 0.25 percent, to 2,361 yen a gram ($622 an ounce) on the Tokyo Commodity Exchange at 3:01 p.m. local time.

Gold in Asia rose for the second day as the U.S. dollar fell against the euro, spurring investors to buy the precious metal as an alternative investment.

The U.S. currency dropped from a three-week high yesterday after a report showed confidence among U.S. homebuilders deteriorated in December, leading traders to increase bets the Federal Reserve will cut interest rates next year. Gold generally moves in the opposite direction of the dollar.

``Gold is rising because of the weak dollar,'' said Kim Sung Gil, a trader at Woori Futures Co.'s overseas futures team in Seoul. ``It seems difficult for the Fed to raise interest rates as most of the economic indexes released in the U.S. have been negative.''

The National Association of Home Builders/Wells Fargo index of sentiment fell to 32 this month from 33 in November, the Washington-based association said. A reading below 50 means most respondents view conditions as poor.

The dollar will drop against the euro through the end of this month as a slump in housing will slow the U.S. economy, according to BNP Paribas SA. The central bank left its benchmark rate unchanged at 5.25 percent this month for the fourth straight meeting, after 17 increases starting in June 2004.

``It's a given that U.S. will lower interest rates next year and dollar will trade weak,'' Ramaswamy Iyer, chief executive officer at Mumbai-based Brics Commodities Pvt. said.

The dollar was at $1.3085 per euro at 11:24 a.m. Mumbai time after reaching $1.3053 yesterday, the strongest since Nov. 24. It reached a 20-month low of $1.3367 per euro on Dec. 4.

`Range-Bound'

Gold typically rises when the dollar falls, as investors try to hedge against erosion in the value of other assets denominated in the currency.

``Gold will largely remain range-bound ahead of the end of the year holidays'' Iyer said. He expects gold to trade between $610 and $620 this month.


In India the price of the metal for February delivery rose 26 rupees, or 0.3 percent, to 9,075 rupees per 10 grams, or 28,223 rupees per ounce, ($629 an ounce) at 11:33 a.m. Mumbai time on the Multi Commodity Exchange.

Gold held near its lowest level in four weeks today, losing some of its safe-haven appeal after the dollar shrugged off a tame US inflation reading and strengthened in New York.

Silver hovered not far from Friday’s three-week low, platinum dropped to its lowest level since November 2, while palladium fell to its lowest in nearly two weeks.

Spot gold hit a low of $614,90 an ounce, not far from Friday’s low of $614,20, before rebounding to $617,10/617,85 in early trade on the back of scattered buying from jewellery makers.

The metal was last quoted at $615,00/616,50 late in the US market on Friday, and off a 16-week high of $649,50 hit in early December.

Benchmark gold futures on the Tokyo Commodity Exchange fell 32 yen per gram to 2,367 yen after losses in New York’s Comex market, further dampening sentiment in the cash market.

"Private investors have lost the intention to buy more gold," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo. He pegged key support around $610 an ounce - a level last seen in late November.

Dealers said gold’s lacklustre performance worried investors, especially those in Japan, where platinum buyers also sold back the metal. Platinum hit a low of $1,093 an ounce, its lowest in nearly seven weeks, down from $1,104/1,112 an ounce late in New York.

Rumours about the launch of an exchange-traded fund propelled platinum to a record high of $1,395 an ounce in late November. The ETF allows investors to trade the commodity on an exchange without buying futures.

Japanese investors and global investment funds have bought precious metals as an alternative to a fragile dollar. The dollar was little changed ahead of a Bank of Japan policy meeting and comments from BOJ governor Toshihiko Fukui to see whether he will signal a rate rise as soon as January.

The dollar traded at 118,05 yen, barely changed from 118,18 yen late on Friday.

The euro was at $1,3085 against the dollar, little changed from Friday when the US currency ignored a benign inflation report and rose as traders continued to take profits on the single currency’s recent rally.

Investors also await US current account data for the third quarter due in the afternoon, with dealers expecting the deficit to rise to $225,0bn from $218,4bn in the previous quarter. Silver edged up to $12,89/12,94 an ounce from $12,85/12,92 an ounce in New York on Friday, when it tumbled to its lowest since November 21 at $12,77.

"I think it’s hard for silver to regain $13 for the time being because the longs are still in the market. But I think this is only a correction. It’s not going to go down much lower," said a dealer in Hong Kong.

"Physical buyers will try to buy gold at the current level, but psychologically, they will also wait for more declines since gold has dropped dramatically last week," he said.

Palladium eased to $323/328 an ounce from $326/329. It had fallen to as low as $320 in early trade.

Gold bounced back and forth on Friday, reflecting a thin market ahead of the year-end, and a firm US dollar is likely to encourage more investors to unwind their positions.

Spot gold rose as high as $628.20 an ounce (oz), hit a low of $624.60 and was at $625.20/626.70/oz by 04:02 GMT, down slightly from $626.00/627.50 late in New York on Thursday.

Gold has fallen steadily since rallying to a 16-week high of $649.50 on December 1 as players locked in profits ahead of the Christmas and New Year holidays. The metal was trading well below the 26-year high of $730/oz hit in mid-May.

A dealer in Singapore said: "I think a lot of people are bit long, that's why gold doesn't move much even though oil is getting higher.

"But I guess everybody knows there's going to be year-end book squaring. They want to keep gold below $650 until the end of this year, and you may see some selling-off. For me, $610 will be a good support and I don't think gold will cross $650."

The euro hardly moved at $1.3145 while the dollar edged up to ¥117.95 from around ¥117.85 in New York after the Bank of Japan's tankan survey showed improved business sentiment but failed to alter expectations the BOJ will keep interest rates on hold next week.

The dollar had gained in the US market on Thursday after strong US jobless data strengthened the view the Federal Reserve may not have to cut interest rates just yet to stimulate the economy.

The US government said the number of people claiming initial unemployment benefits last week fell more sharply than economists had expected.

US crude oil futures extended gains to hover above $62 a barrel on Friday after rising more than $1 a day earlier on the back of an Opec decision to cut more production from February.

The physical sector saw light buying at lower levels in the past few days, which helped push up premiums for gold bars to 30USc/oz to the spot London price in Hong Kong from 10c last week.

"There's a little bit of buying," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that gold would be stuck between $620 and $635 until the Christmas holiday was over.

"There's position squaring ahead ... More players will leave the market," he said.


Platinum dropped to $1 104/1 109/oz from $1,108/1,118 late in New York.

Silver edged down to $13.75/13.80/oz from $13.76/13.83/oz in New York.

Palladium at $326/331/oz.

South Africa's Gold Fields Ltd, the world's fourth-largest gold producer, now owns 82 percent of Western Areas, it said on Thursday.

Gold Fields has offered 35 of its own shares for every 100 shares in Western Areas which owns half of South Deep, one of the world's deepest gold mines.

The offer is one part of three related deals worth $2.5 billion by Gold Fields to gain control of South Deep.

At the beginning of the month, the miner completed the purchase of Barrick Gold's 50 percent stake in South Deep and rival Harmony Gold said it would tender its 29.2 percent stake in Western Areas.

Buying the stake held by Canada's Barrick cost $1.52 billion, consisting of $1.2 billion in cash and 18.7 million of its own shares.

Last month, Gold Fields said it had concluded the first transaction, to buy a 34.7 percent stake in Western Areas owned by JCI Ltd.

Just because gold is down 14 percent from its high of $732 an ounce on May 12, doesn't mean the rally that began six years ago is coming to an end anytime soon.

The swooning U.S. dollar, which has become a proxy for the slowing American economy and the nation's humiliating lack of success arranging regime change in Iraq, banning weapons of mass destruction in North Korea and Iran and reducing its trade and budget deficits, is making gold Wall Street's darling again for 2007.

``Gold is the purest play against the dollar,'' said Louise Yamada, managing director of Yamada Technical Research Advisors LLC in New York, who sees gold surpassing $730 next year on its way to $3,000 within a decade. Yamada, the former head of technical research at Citigroup Inc., proclaimed gold cheap in 2001 when it fetched $279.

She now has lots of company among the world's biggest financial institutions. Deutsche Bank AG's chief metals economist, Peter Richardson, made gold his favorite pick for 2007. JPMorgan Chase & Co. analysts John Normand and Jon Bergtheil on Dec. 7 said only corn could rival gold as the best bet while Merrill Lynch & Co. analyst Michael Jalonen elevated gold's value through 2010.

``If you can only make one commodity investment,'' gold is the ``choice for 2007,'' said Richardson from his office in Melbourne.

That's partly because five of the past six bear markets for the dollar led to an increase in gold.

Dollar's Slide

The U.S. currency started gasping last February against the Euro and dropped 13.8 percent since then during what has been the worst American housing market in 15 years. On a trade- weighted basis, it has lost 6 percent of its value and is headed for its biggest annual drop since 2004.

Gold, up 22 percent in 2006, is poised for its sixth straight annual gain. The streak is unmatched since 1971 when gold was freed from its peg to the dollar after the U.S. government said it would no longer exchange its currency for the metal.

From the end of World War II, the dollar was fixed at $35 per ounce of gold. In 1934, gold rose to $35 per ounce from $20.67 after passage of the Gold Reserve Act in January that year.

Prices have jumped 131 percent since the end of 2000. The last such rally was in 1979, when gold advanced to $541 from $229 a year earlier and was headed to a record $850 in January 1980.

Breaking Gold Link

To be sure, there are enough skeptics to make the betting on gold controversial.

``It's rare that an asset outperforms others consistently year on year,'' said Andrew Kinsey at Johannesburg-based Craton Capital, whose $267 million precious-metals fund rose 51 percent this year. ``The dollar-gold relationship may break down next year. Geopolitical risks and energy prices could rise to the forefront and impact gold more than the value of the dollar.''

The U.S. dollar will rebound in 2007, said Joe Prendergast, global head of currency strategy at Credit Suisse in London, during a recent radio interview with ``Bloomberg on the Economy with Tom Keene.'' He predicts a 3 percent appreciation for the dollar by December 2007.

Some analysts say the current consensus that predicts no end to the dollar's weakness is wrong. ``The dollar is completely undervalued,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. ``Metal prices are hitting the tops. This month and next January, base and precious metals prices will go down.''

Gold Rallies

Investors who sell assets denominated in U.S. currency often buy gold. Declines of more than 20 percent for the dollar against six major currencies led to a gold rally of 22 percent from January 1971 to July 1973 and 95 percent from June 1976 to October 1978.

A tumbling dollar caused the metal to rise 40 percent from February 1985 to the end of 1987, 6 percent from June 1989 to September 1992 and 83 percent from July 2001 to December 2004.

Gold's $75 billion market, a fraction of the $2 trillion traded daily in foreign exchange, is getting a lift from widening budget and trade deficits that undermine the dollar. The International Monetary Fund estimates the U.S. current account deficit will expand 9.8 percent to $869.1 billion in 2006.

Tight Supply

``Gold is probably the most straightforward investment to go with in this environment because of its consistent inverse relationship to the dollar,'' said Yamada, voted Wall Street's best technical analyst from 2001 to 2004 in surveys by Institutional Investor magazine. ``Other countries are trying to diversify their dollar holdings. They're buying gold and anything they can to get out of the dollar.''

JPMorgan Chase's Normand and Bergtheil told clients that gold and corn will offer the best opportunities among commodity investments next year because of tight supply and a weakening dollar. The London-based analysts raised their estimate of average gold prices next year by 11 percent to $678 an ounce. Prices in 2008 will average $725 an ounce, they wrote.

``Gold is the only metal, base or precious, which will see no meaningful increase in mining supply next year,'' the analysts wrote, estimating that supply will grow by 1 percent.

Merrill's Jalonen raised his projections for gold in 2008 to $650 an ounce from $600, and 2009 was increased to $625 an ounce from $600. The Toronto-based analyst maintained his 2007 projection for a rally to an average of $675 an ounce ``due to a rebound in gold fabrication demand for bullion, lower central bank sales and continued growth in investment demand.''

The U.S. dollar was mixed Tuesday against other major currencies in European trading. Gold prices rose.

The euro traded at $1.3247, down from $1.3251 late Monday.

Other dollar rates compared with late rates Monday included: 116.86 Japanese yen, down from 116.88; 1.2022 Swiss francs, up from 1.2014, and 1.1517 Canadian dollars, up from 1.1481.

The British pound traded at $1.9619, up from $1.9587.

Gold rose to $629.50 per troy ounce in London, up from $629.30 late Monday. In Zurich, gold traded at $628.15, up from $627.93. Gold rose $2.15 to $629.55 in Hong Kong.

Silver opened in London at $13.83, up from $13.79.

Gold rose on Monday after hitting a three-week low, with bargain hunters and physical buyers supporting a market that remained vulnerable due to thin trading ahead of Christmas.

Platinum was also choppy, hovering near a five-week low of $1,094 an ounce hit on Thursday -- well below a record high of $1,395 reached on November 21.

"It appears that the market wants to see a weaker dollar and that's going to underpin the precious metals, especially gold and silver," Jeremy East, head of metals trading at Standard Chartered bank, said.

"We are coming into the year-end, coming into more illiquid markets. If we see the dollar start weakening, we can easily see gold back up to $650, $660 again," he said.

Gold touched a high of $628.20 and a low of $622.60 before settling at $626.10/627.60 an ounce by 1519 GMT, against $624.70/626.20 late in New York on Friday, when it fell $6.

The dollar steadied against other major currencies, giving back some of last week's gains made after solid U.S. jobs data helped to ease concerns that the Federal Reserve may need to cut interest rates early next year.

Dealers said the dollar would continue to give direction to the market in the near term. They awaited the Fed's last meeting of the year on Tuesday for hints as to the dollar's outlook.

Gold usually moves in the opposite direction to the dollar. A stronger greenback makes gold, which is denominated in dollars, more expensive for holders of other currencies.

Gold prices will top $1,000 an ounce in two to five years because of a currency crisis fueled by a continued devaluation of the dollar, a leading analyst and investor said.

Paul van Eeden of Toronto told Western mining interests that he does not expect gold prices to fall below $400 an ounce again.

"I say with a very high level of confidence that gold prices will go to $1,000 an ounce in the next two to five years," he said Thursday at the Northwest Mining Association's annual convention in Sparks.

Billed as the second largest annual mining convention in the U.S., the five-day gathering drew 1,800 people before it ended Friday.

Industry officials said van Eeden is among at least three dozen analysts who have predicted gold prices would surpass $1,000 an ounce over the next five years.

Gold prices have soared since hitting a 10-year low of $252.80 an ounce on July 20, 1999. They closed at $631 an ounce Friday on the New York Mercantile Exchange, down from a high of $725 an ounce on May 12.

Nevada is the world's third largest gold producer behind South Africa and Australia.

Laura Skaer, executive director of the mining association, said van Eeden's projection didn't surprise her as the industry is enjoying an unprecedented boom cycle.

"It makes sense economically given the political unrest around the world," she said. "Gold over the last 200 years has been the preferred currency. It's where people go in times of uncertainty."

But John Dobra, an economics professor at the University of Nevada, Reno, said he does not foresee enough devaluation in the dollar to push gold prices above $1,000 over the next five years.

"Anything is possible, but I think the dollar will probably not depreciate the 30 to 40 percent required to get us there," he said. "That big a change in that short period of time is not likely based on historical experience."

Russell Fields, president of the Nevada Mining Association, also was unsure whether gold prices would reach $1,000 an ounce by then.

"I've seen gold prices do different things other than what some of the best forecasters have predicted," he said.

Van Eeden said rising gold prices have been tied to the dollar's devaluation. The dollar has dropped an average of 10 percent this year compared with the pound, franc and euro.

Van Eeden said he expects America's increasing trade deficit to lead to an overall 35 percent drop in the value of the dollar against other currencies over the next two to five years.

"If that happens as I expect, gold prices will go over $1,000 an ounce," he said.

Van Eeden said he was fully invested in mining stocks from 1998 to May, when he sold half of the stocks.

"I thought gold prices were overextended. Always hedge your bets," he advised the audience.

The only factor that would cause gold prices to drop is if an over-valuation in the price of base metals forces a selloff of all metals, including gold, van Eeeden said.

"If not for that risk, I'd be 100 percent invested" in mining stocks, he said.

Jonathan Price, Nevada state geologist, said the industry is enjoying its greatest gold boom ever.

The 200 million ounces of gold produced mostly in Nevada since 1981 is more than the 29 million ounces produced during the California Gold Rush and the 95 million ounces produced in various areas of the U.S. from 1895 to 1920, Price said.

South Africa's Gold Fields Ltd will not raise its all-share offer for Western Areas, which will close on December 29, it said on Friday.

Gold Fields, the world's fourth biggest gold producer, said as of Thursday it had received acceptances for 66 percent of the shares under offer and, together with shares it already held, controlled 75.8 percent of the firm.

Gold Fields has offered 35 of its own shares for every 100 shares in Western Areas, which owns half of South Deep, one of the world's deepest gold mines.

The offer is one part of three related deals worth $2.5 billion by Gold Fields to gain control of South Deep, which has the world's biggest gold deposit.

Last week, Gold Fields completed the purchase of Barrick Gold's 50 percent stake in the mine and rival Harmony Gold said it would tender its 29.2 percent stake in Western Areas.

Buying the stake held by Canada's Barrick cost $1.52 billion, consisting of $1.2 billion in cash and 18.7 million of its own shares.

Gold Fields said last month it had concluded the first transaction, to buy a 34.7 percent stake in Western Areas owned by JCI Ltd.

Gold Fields' shares fell 1 percent to 127.50 rand by 1315 GMT while Western Areas' shares were unchanged at 44.50 rand, compared to a 0.33 percent rise in the gold mining index.

Barrick Gold Corp., the world's biggest gold producer, failed in a $1.71 billion hostile takeover bid for NovaGold Resources Inc.

Barrick said today in a statement it acquired 13.6 million shares at the close yesterday of its offer of $16 a share for Vancouver-based NovaGold, or 13 percent of the 106.7 million fully diluted shares outstanding.

``Barrick will continue its disciplined approach to acquisitions and other business opportunities,'' Chief Executive Officer Greg Wilkins said in the statement.

Barrick, based in Toronto, became the world's largest gold producer in March after completing the acquisition of Placer Dome. Inc.

Gold extended losses and hit its lowest level in two weeks on Thursday after the dollar strengthened on upbeat U.S. job growth data, raising fears of more sell-offs in coming days.

Other precious metals tracked gold. Platinum fell more than 2 percent and hit a five-week low with selling in Japanese futures further weighing on sentiment, while silver hovered below the six-month high of nearly $15 an ounce it reached this week.

Spot gold hit a low of $626.70 an ounce, its lowest since Nov. 22, down from $630.60/632.10 late in New York on Wednesday, when it had fallen nearly 2 percent.

"The thoughts were that we would be looking to test and break through $650 again and probably up towards $675. Given we're sort of below that, I would think investors might be a little bit more cautious," said Darren Heathcote of Investec Australia.

"I think we need to be a little bit more cautious now about where gold goes in the next few days. If it remains below $630s, I would think that we'll be targeting $620 again," said Heathcote, referring to a level last seen in mid-November.

Gold rallied to a 16-week high at $649.50 an ounce last Friday -- just below the stubborn $650 resistance level.

Benchmark gold futures on the Tokyo Commodity Exchange, currently October 2007, fell 35 yen per gram to 2,345 yen ($20.37), reflecting declines in New York's COMEX market.

Gold has gained on a weaker dollar before the U.S. currency changed course after surprisingly strong U.S. data on employment and service sector growth offset other figures showing manufacturing activity contracting.

A trail of weak economic data has investors bracing for the Federal Reserve to slash interest rates from the current 5.25 percent as many as three times next year -- even as Fed officials have indicated they remain worried about price pressures.

"A rise in the dollar and position unwinding ahead of the Christmas holiday season kept downward pressure on the precious metals market," said Hiroyuki Kikukawa, an associate director at Nihon Unicom Inc.

The European Central Bank's policy meeting later in the day could affect the currency market and precious metal prices, he said.

The dollar held gains scored in New York after a private-sector report showed solid U.S. job growth in November, boosting chances of a positive payrolls report later in the week.

The dollar was little changed at 115.10 yen , up from a four-month low of 114.43 yen hit on Tuesday. The euro was hardly changed at $1.3291 , hovering below a 20-month peak of $1.3370.

The physical sector slowed to a trickle, suggesting that jewellers and investors were waiting for more declines.

"I don't think people will buy at this level. We will probably see some interest at around $600," said a dealer in Hong Kong.

"Technically, the market has changed direction," said the dealer, adding that gold was now below the 14-day moving average around $635.

Barrick Gold Corp. has won approval for its Pascua Lama gold and silver project in South America, setting the stage for possible production by 2010.

After more than two years of reviews and several modifications, the Argentine province of San Juan approved Barrick's environmental impact assessment yesterday.

"This milestone decision is the result of a serious and thorough evaluation process on both sides of the border," Barrick's president and chief executive officer, Greg Wilkins, said yesterday in a written statement.

Pascua Lama straddles the border of Argentina and Chile more than 4,500 feet above sea level in the Andes mountains. It has been delayed several times by concerns about production costs and opposition from environmental groups.

In February, Chile gave the go-ahead to the $1.5-billion (U.S.) project, which may contain as much as much as 18.3 million ounces of gold and 650 million ounces of silver.

Out of Barrick's seven development projects, Pascua Lama is "next in line, so it is by default the most important one," said Victor Flores, an analyst with HSBC Securities.

Barrick said it must obtain several other permits before construction can begin.

Gold mining stocks headed south as prices for the metal cooled Tuesday, while copper miners followed the price of copper higher.

Barclays Capital analyst Kevin Norrish told clients in a report Tuesday that "some profit-taking has emerged overnight and early this morning" in the gold market, which has driven prices lower.

Gold for February delivery dipped $2.40 to $648.50 an ounce in midday trading on the New York Mercantile Exchange.

Shares of gold miner Barrick Gold Corp. fell 60 cents, or 2 percent, to $30.90 on the New York Stock Exchange. Newmont Mining Corp. shares edged 26 cents lower to $46.93, while Goldcorp Inc. shares shed 59 cents to $30.59.

March copper picked up 7 cents to $3.25 a pound.

Copper miners Phelps Dodge Corp. and Freeport McMoran Copper & Gold Inc. -- which have agreed to merge -- both saw their shares tick higher. Phelps Dodge gained 15 cents to $122.30 on the Big Board, while Freeport added 77 cents to $61.70. Peru's Southern Copper Corp. saw its shares lose 20 cents to $55.30.

Gold Opens Higher In Hong Kong

Gold opened at US$646.90 an ounce on Tuesday in Hong Kong, up US$6.24 an ounce from Monday's close of US$640.66.

February gold rose $2 to trade at $648.90 an ounce Monday morning.

"Dollar diversification will continue to be the main theme of the market with recent gains in ETF [exchanged-traded fund] holdings showing investors are keen to hold the yellow metal," said James Moore, an analyst at TheBullionDesk.com, in a note to clients. March silver was down 2 cents at $14.17 an ounce and March copper traded at $3.162 a pound, down 1 cent. Metals shares traded mainly higher, reflected by a 0.5% rise in the Amex Gold Bugs Index.

Gold Expected To Hit New Highs In 2007

Gold is expected to close the year on a stronger note and has potential to set new highs in 2007, but the market will continue to remain choppy in the near term, chartists said on Friday.

"I think we are going to go back initially to the $690-an-ounce area and at some stage to revisit that peak (set) in May this year," said independent metals analyst Cliff Green.

"There would still be plenty of short-term dips in this market," he said, but added that any near-term weakness should be aggressively bought.

Gold climbed to a 16-week high of $648.60 an ounce on Friday on a dollar weakness, but slipped to $644.50/645.25 by 1:30 p.m., down from $647.20/648.20 in New York late on Thursday.

Gold rallied to a 26-year high of $730 in mid-May as funds poured money into commodities amid worries about rising energy costs, tensions in the Middle East and uncertainties in the dollar's outlook.

It hit an all-time high of $850 an ounce in January 1980.

Robin Wilkin, technical analyst at J.P. Morgan, said gold's broad trading range of $550-$700 in 2006 was going to give way for a move towards the record high.

"(But) half of the problem is that a lot of gamma trading is going on. So every time it rallies, all the options guys are just selling loads and it's dampening the effect," he added.

Gamma trading refers to dealers covering their options exposure as a contract moves towards maturity.

Some chartists predicted that gold would trade in a range in the coming months before moving higher.

"You have got potentially further consolidation in the first quarter, but beyond that look for further upside," said MacNeil Curry, technical analyst at Barclays Capital.

Weekly chart pattern suggested that the choppy price range would give way to higher prices in the medium term, he added.

"Longer term, spot gold has resumed its long-term bull move," Karen Jones of Commerzbank wrote in a weekly report, adding that several technical patterns were supportive of the positive view towards the metal.

SILVER TO TRACK GOLD

Technical analysts, who predict future price movements based on past market performance, said silver was also showing similar technical patterns, and prices were expected to set new highs.

Spot silver jumped to a six-month high of $14.00 an ounce and was last quoted at $13.84/13.91. Prices surged to a 25-year high of $15.17 an ounce in May.

"All the precious metals would see new highs next year," said Roberts, adding silver would try to move towards $17-$18 in the long term.

Chartists said any drop in silver prices to around $12.50 an ounce on profit-taking would do some damage to the trend, but the metal was expected to resume its upward journey after a consolidation phase.