LONDON -- Gold steadied on the last working day of the year after matching a three-week high, but lingering worries over Iran's nuclear ambitions and the dollar's weakness kept market sentiment positive, dealers said on Friday.
The metal is expected to close the year nearly 23 percent above its last price in 2005, but it was about 13 percent lower than the 26-year high of $730 an ounce set in May.
"Having broken through key chart levels at $630 (an ounce), 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," Standard Bank said in a daily report.
Gold edged down to $634.30/635.30 by 1529 GMT after rising as high as $635.20, against $634.10/635.10 in New York late on Thursday.
On Thursday, it rose to $635.20, the highest since Dec. 8.
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The technical trend was strong after gold clearly broke through the 30-day moving average around $629 the previous day. Traders were watching whether the metal could break through $640 for the first time since Dec. 6.
"Traders are unlikely to be too aggressive on the last trading day of the year, with gold likely to hold in the $630-$638 area," said James Moore, precious metals analyst at TheBullionDesk.com.
Growing uncertainty in Iran was drawing safe-haven buying, while the perception was growing that the current uptrend in gold would continue for a while, dealers said.
"Iran is one thing pushing up gold prices, which is prompting investment funds to allocate new money to gold ahead of the new year," said Hisaaki Tasaka, a market analyst at Ace Koeki Co. Ltd. in Tokyo.
"More new funds are expected to head into gold next year and they are expected to provide solid support in the near term. The factor about Iran is not a strong factor, but the market is currently more sensitive in reacting to bullish factors."
The U.N. Security Council on Saturday voted unanimously to impose sanctions on Iran over its trade in sensitive nuclear materials and technology in an attempt to stop uranium enrichment work that could produce material to be used in bombs.
Gold usually rises on geopolitical tension as precious metals are seen as safe-haven investments.
In other precious metals, platinum prices were unchanged at $1,115/1,21 an ounce, while palladium rose $2 to $324/330. Silver was at $12.81/12.88 an ounce, versus $12.83/12.90 late in New York.
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