Some analysts in Australia, one of the world's biggest gold producers, believe the metal's price rise will be capped by producer selling poised to emerge at US$315 an ounce while others see gold rising on to $320. But all agree that gold is back.

"Overall it's really positive," said Charles Perrignon of Australia's biggest bullion dealer, Macquarie Bank Ltd.

"There's an upward bias to the market for sure, hopefully it remains, definitely people are talking it up," Perrignon said.

Gold settled in the Australia/Asia time zone on Tuesday at about $309, steady with New York's close. This follows the metal's rise from its recent price routine of about US$300 to break through $305 before going on to hit the high $316s for the June contract in New York on Monday.

While overnightprofit-taking held prices at $309, as long as gold stayed above $308 it still looked reasonably positive, Mark Fremantle of Rothschild Australia Ltd said.

"It will have another attempt at the high side," he said.

Overnight, April spot gold failed to breach Fremantle's initial target of $315, but if it did $320 was in sight, he said. Fremantle's gold target price range is $315-$320. In mid-December last year, gold reached an 18-year low of US$283.00. Macquarie's Perrignon believes Australian producers will enter the market as sellers, with definite signs of interest at the current Australian price of A$470 after reaching A$475, dramatically higher than its recent trading range. Big selling was rumoured to be waiting at US$315.

Selling would cap the market while some consolidation would settle the market's "quite aggressive" rise, he said.

"I think you're going to find selling capping any further rises as producers get ready to sell."

The market needed to find some support before moving ahead.Fremantle also sees the Australian dollar gold price of A$470 as quite attractive to producers. While large producer selling had not emerged, there had been some interest, he said.

With gold Australia's second-biggest commodity export, worth about A$5.2 billion in 1997/98, the only factor holding back a gold-powered surge in the Australian dollar is the Asian crisis, particularly new fears about Japan.

"It is quite a different situation (than usual)," Perrignon said. But if concerns over Japan dissipated, a catch-up by the Australian dollar with gold's price rise was expected, he said. "The short-term nexus between gold and the Aussie (dollar) appears to have been broken although that probably won't exist for a long period," Rothschild's Fremantle said.