In London, gold was fixed at USD 313.30 per ounce while in Hong Kong it settled at USD 313.05. A significant rise in gold prices was driven up by its ability to hold onto gains made late last week, dealers said, adding that the growing belief that European central banks had most of their gold sales behind them had helped improve the market tone.

Over the past 18 months, in the run-up to the creation of the European Economic and Monetary Union in 1999, central bank gold sales have put severe pressure on gold prices.

The price rallied though the 100-day moving average of USD 303 on Friday on news that rating agency Moody's Investors Service had revised its outlook for Japan's sovereign debt to negative from stable.

In Europe, a rally in gold was mainly attributed to good buying by a New York-based brokerage.Although, traders in London said the price looks like it could be near the top of the rally.

"Gold is up purely on New York buying. There has been no news to boost it. It hit at USD 310.50 and 312.50 this morning but capped at 314.50," said a trader for a Japanese brokerage house in London.

Other traders in London and Zurich said they expected the price to fall again, once New York trading opens because the difference between Friday's close and Monday's opening would be very wide.

"They do not like to see such big gaps in the technical chart in New York," said a London gold trader.

Trading in silver was subdued but holding high levels despite reports that US investor Warren Buffett might have sold about one third of his stocks of silver.

Silver was up at USD 6.62 per troy oune in London while in Hong Kong it was quoted at USD 6.67.

Local prices shoot up by Rs 90

MUMBAI: Gold prices flared up by Rs 90 per 10 gram on the bullion market here today on firm London advices coupled withheavy seasonal demand in the wake of thin supplies. Silver prices also rallied on good industrial demand.

Standard gold zoomed up by Rs 90 to close at Rs 4250 as against the last close of Rs 4160. 22-carat gold was quoted higher at Rs 3930 from Rs 3850, while ten-tola gold bar of .999 purity prices sky-rocketed by Rs 1,200 to close at Rs 49,900 from Rs 48,700.

Ready silver of .999 fineness spurted by Rs 105 per kilo to end at Rs 8975 from Rs 8870, while raw silver of .916 at Rs 8865 and tenderable silver at Rs 8980 also rose sharply from the previous close of Rs 8740 and Rs 8875 respectively on poor supply in view of higher overseas advices.