Sept. 11 (Bloomberg) -- Gold traded within 0.4 percent of a 16-month high in London as the dollar weakened against currencies such as the euro and oil gained, spurring some investors to buy the metal as a haven.

The dollar traded close to a record low against the euro and crude oil rose to within 50 cents of a record. Some investors view dollar-denominated gold as a hedge against further declines in the currency and inflation when energy prices surge.

``Gold still has higher to go,'' Alexander Zumpfe, a trader at Hanau, Germany-based Heraeus Metallhandels GmbH, an owner of five precious-metals refineries, said by phone today.

Gold for immediate delivery rose $1.40, or 0.2 percent, to $704.50 an ounce as of 11:28 a.m. in London. The metal climbed to $707.09 an ounce yesterday, the highest since May 2006.

Bullion has gained about $117 in the last 12 months, the second-best performance over that timeframe in the last decade, according to Bloomberg calculations. The best performance was an advance of $140 in the 12 months to Sept. 11, 2006.

``The weak dollar, strong oil price and concern about the U.S. credit market,'' may mean gold reaches $730 an ounce this year, Zumpfe said.

Silver for immediate delivery rose 1 cent to $12.55 an ounce. The metal has declined 2.6 percent this year.

``The outlook appears generally positive for gold,'' James Steel, an analyst at HSBC Securities in New York, said in a note to clients yesterday. ``The longer that credit woes dominate the financial markets, the more likely investors are to seek gold as a safe haven.''

Gold has held above ``the key psychological level'' of $700 an ounce for the past three trading sessions, which implies ``a high degree of investor confidence in bullion,'' Steel said.

To contact the reporter on this story: Danielle Rossingh in London at drossingh@bloomberg.net

Last Updated: September 11, 2007 07:08 EDT