Gold steadied on Friday to trade just below a five-week high, but analysts saw potential for further gains as a recent slump in the dollar and firmer oil attract investment funds into the market.

Spot gold was quoted at $667.10/667.70 an ounce by 1008 GMT, against $667.00/667.80 late in New York on Thursday, when it rallied to as high as $669.05 as the dollar tumbled to a record low against the euro.

Funds have been attracted into these markets because they are in an uptrend and that gives them an opportunity to make some money. They are making the markets more volatile, said Richard Davis, director of natural resources at Merrill Lynch Investment Managers.

Our view on gold is very positive going forward. Investment demand is growing and that is important because investment demand is the only thing which has driven a bull market in gold.

Gold rose as high as $693.60 in April, the highest price in 2007. It hit a 26-year high of $730 last year.

Dealers said the metal might gain with a further decline in the dollar and rise in oil prices, which have driven the metal in the past sessions.

The euro eased but hovered within reach of a record high against the dollar the previous day. Oil was off an 11-month high but still within sight of last August's record high price.

Funds are shifting into the market where there is a clear trend. It was important that gold has broken through the 100-day moving average clearly, said Shuji Sugata, manager at Mitsubishi Corp. Futures and Securities Ltd.

Gold was also well-above the 100-day moving average of $663.58 as of Friday.

The dollar's fall against the euro is another positive factor. The trend for gold has turned bullish, he said.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.

The market's focus was on U.S. retail sales data for June at 1230 GMT. Traders said a weak reading was likely to further damage sentiment for the dollar.

In other metals, platinum fell to $1,309/1,313 an ounce from $1,314.80/1,321.80 late in New York on Thursday, when it rallied to its highest in nearly two months at $1,315.90.

The metal has been supported by news from South Africa, where trade unions declared a dispute against the world's biggest platinum producer, Anglo Platinum Ltd., on Wednesday after it refused to increase its wage offer.

Silver rose as high as $13.13 an ounce, its highest level since June 22, and was last at $13.11/13.15, versus $13.08/13.13 in the U.S. market. Palladium was at $367/371 an ounce, versus

$367.75/371.75.

(Additional reporting by Chikafumi Hodo in Tokyo)

Merrill Lynch Gold