Gold prices soared to their highest fixing since February 22nd 1990 as investors poured into the market encouraged by lower interest rates and further signs that a major bull market was developing.

Gold fixed at $416.25 per ounce after $409.10 on Thursday, leaving behind the levels reached on panic buying when Iraqi troops marched into Kuwait in August 1990.

"The target now is the $425 area, but whether it gets there in a straight line or not is debatable," a dealer said. But by the close, it had eased to $415.15, still $5 ahead of Thursday after speculators had taken a quick profit.

"The market got a bit long and eased back from the high. Now it is a market in which to buy on any dips," he added.

On Thursday, when the current leg of the bull run was gathering pace, bullion struggled to clear the psychological hurdle at $410 until towards the end of the New York session. "The $410 level, which was such tough resistance yesterday, is now a major support," a dealer said.

The fresh push behind gold prices followed a round of interest rate cuts that began with a 25 basis point cut in the United States on Wednesday, joined by several European banks on Thursday.

Lower interest rates reduce the investment cost for gold and make it more competitive against interest and dividend yielding investments.

Another major spur for the buyers came when the largest gold miner outside South Africa, Barrick Gold Corp, said this week it had reduced its hedging, or forward selling. It expected a "secular readjustment" in the market interpreted as meaning prices were going to rise.

No selling into the rally by producers was reported on Friday. "They were noticeable by their absence. There has been no signs of producer selling," a dealer said.