London (Platts)--12Oct2009/819 am EDT/1219 GMT

Gold fixed above $1,050/ounce Monday, proving its weight to investors.

"Overall, resistance is still holding well at $1,055-1,060/oz and we should consolidate here in absence of any important macro data at the start of the week," VTB Capital analyst Andrey Kryuchenkov said in a research note. "The dollar index should hold in a sideways pattern above 75.8/9 or sees more gains, with support on gold holding around $1,045-40."

The dollar has been a key driver of gold's rally for a number of months. With the greenback's validity as the global reserve currency coming under ever-more scrutiny, further weakness could help propel the yellow metal even higher. "Overall we expect the greenback to lend further direction, but given the recent gains we think gold is looking top heavy and would benefit from a pullback, or at the very least a period of consolidation," Thebulliondesk.com analyst James Moore said in a research note. Gold fixed in the morning at $1,052/oz, from a Friday afternoon fix of $1,051.50/oz.

Edison Investment Research analyst Charles Gibson told Platts: "We maintain our stance that the inevitable consequence of quantitative easing must eventually be too much money (or in this case, more money) chasing too few goods and hence that it will cause inflation. Moreover, while it is theoretically possible for central banks to withdraw liquidity from the market when the 'real' recovery gets going in earnest, our reading of history is that this never happens in reality, but that central banks overstimulate too much and for too long."

Gibson added: "As a result, in the medium term we continue to expect inflation and maintain our gold price target of $1,567/oz. In the shorter term, however, it may be vulnerable to renewed weakness (or the perception of renewed weakness) in the global economy, which will inevitably affect physical demand."

Moore added: "Our mid-to-longer term view is still bullish though with inflation fears, dollar weakness and low interest rates potentially pushing gold to $1,100/oz before year-end."

Morgan Stanley said that over the last week "gold continued to rally, boosted by another legdown in the US dollar. However, the dollar move alone didn't explain the spike, with gold in euro and India rupee terms rallying 3.5% and 1.7% week-on-week, respectively. Silver maintained its recent multiple, rising by more than twice gold's move."

Silver fixed at $17.89/oz. Looking again at the yellow metal, HSBC analyst, Jim Steel said: "In the near term, gold and the other precious metals may be dragged down by long liquidation. The gold rally has been nearly relentless, and the bullion market may be in need of a period of consolidation or even correction, in our view. We expect that the dollar will continue to wield a significant influence on gold prices."

--Ben Kilbey, ben_kilbey@platts.com