Until last week Australia, one of the world's major producers, had written off gold as a bulwark of value amid fragile and unpredictable paper investment markets.

But gold is in vogue as Australian producers and funds pocket gains after selling tonnes of gold at around A$500 an ounce when the local dollar plummeted to a record low last week.

Gold prices in Asian currency terms are up even more, by 40-50 per cent. "Anyone (in Asia) who maintained gold as part of a portfolio for a rainy day would be substantially better off," said Gavin Wendt, resources analyst at Intersuisse Ltd.

"It's been around for 3,000 years for a reason and just because of what might have happened in the last 10 or 15 years does not meanit's dead and buried," he said.

The gold sellout by Australian producers and funds last week when the precious metal hit A$500 an ounce is seen as a sign of the metal's strength rather than a weakness in the market.

Bullion dealers are not saying how much more gold has been sold in Australia after the five tonnes or so which were sold last Thursday ahead of the Australian dollar's crash to an all-time low of US$0.5530. Selling has continued since then but at a much easier pace.

The strong rise in the metal's price in non-US dollar terms has left Australian dealers ebullient on bullion, arguing that the greenback is now a misleading measure of price.

With gold holding at about US$279 an ounce or about A$477 on Thursday, the precious metal was seen having re-established itself as a hedge against volatility.

"They were selling equities, paper, currency and gold was not sold (in the same panic). By default gold was a bit of a safety mechanism. That's a good thing for gold," said bullion dealer CharlesPerrignon of Macquarie Bank.

"Gold's performed exceptionally well given the overall environment," he said. "Definitely there has been renewed interest (in gold) with the volatility in the market."

Australian dealers and analysts see gold holding reasonably strong levels and inducing Australian producers and funds into further sales at above about A$485 ounce.

Macquarie's Perrignon sees a chance for gold to trade back into the mid-US$280s, although with the Australian dollar seen oversold by domestic analysts the window of opportunity for Australian producers to sell may not be open for much longer.

Intersuisse's Wendt sees gold at US$280-$290 for the rest of the year before firming to around $300 at the end of the year. "I'm reasonably comfortable with US dollar gold (but) reasonably bearish on Aussie dollar gold," Perrignon said.

"US dollar gold has performed exceptionally well (showing) almost a flight to quality. With the volatility in equity and currency markets, you have not seen panic sellingin gold."

A strong gold price in Asian currencies, the Australian and Canadian dollars, the Russian rouble, the South African rand and an increasing number of South American and European currencies -- just about any currency apart from the US dollar -- showed that gold still had a role as a store of value, Wendt said.

"It's an irresistible price," he said of the A$500 ounce or so where Australian producers and funds sold last week. Some Australian producers now faced "quite unbelievable" margins. "You would be mad not to sell," he said.