Business & Finance Club - LONDON : Gold prices rose back toward $1,350 an ounce in Europe on Monday and silver touched a new 30-year high as expectations the United States will introduce further monetary easing undermined faith in the dollar.

Spot gold was bid at $1,347.30 an ounce at 5:31 a.m. ET, against $1,343.25 late in New York on Friday. U.S. gold futures for December delivery rose $2.90 an ounce to $1,348.20. Spot gold is still within sight of last week's record $1,364.60.

The dollar slipped on Monday after world finance ministers failed to reach agreement on currency imbalances at a series of meetings this weekend, leaving the U.S. Federal Reserve set to pursue loose monetary policy to support its ailing economy.

"We don't seem to have any agreement on any sort of currency accord," said Citi analyst David Thurtell, saying gold's inverse link to the dollar had been particularly strong in recent weeks. "Gold has pretty much stuck to tracking dollar moves."

Historically a weaker dollar boosts gold as it makes dollar-priced commodities cheaper for other currency holders, and lifts the metal's appeal as an alternative asset.

This correlation weakened early this year as both gold and the dollar benefited from concerns over European sovereign debt levels. However, it has now reasserted itself.

"Precious metals... continued to benefit from a weak U.S. dollar and the "race to the bottom' in global currency markets," said Morgan Stanley in a note.

"We view QE (quantitative easing) and its monetary consequences as an unequivocal benefit for gold and silver in particular, as investors seek out their role as stores of value in times of fiat currency risk."

As well as currency effects, gold is being supported by expectations investors will add to their bullion holdings as a portfolio diversifier, both in the private and official sectors.

Russia's central bank has bought over 100 metric tons of gold on the domestic market this year, board member Sergei Shvetsov said on Monday, and speculation is rife that a number of other central banks, chiefly in Asia, are set to add to their holdings.