LONDON (Breaking Views) - Winter has dulled gold's sparkle.

As the dollar has clawed back some of its losses, so has the gold price slumped. The precious metal is now struggling to hold its chin above $400 an ounce, compared to its recent peak of almost $426.

Since the trade-weighted dollar peaked in February 2002, gold has rallied by 26 percent in dollar terms but increased by only 7 percent in Japanese yen and just 5 percent in sterling terms. Meanwhile, it has fallen by 7 percent in euros.

G7 ministers meet this weekend in Florida, with some speculation that a joint statement may be forthcoming to slow the dollar's fall. However, Japan and the United States have said they do not want to make foreign exchange issues a major topic, which suggests that there will be little official support for the dollar.

Gold investors have shrugged off other striking news, such as the possibility that Japan might diversify some of its mountain of foreign reserves into gold.

Gold comprises 1.5 percent of Japanese reserves. So an increase to the global average among central banks of around 10 percent would require Japan to buy 4,300 tons of gold -- more than the world's total annual supply. Yet the gold market hardly budged when Japan's Finance Minister said he was thinking about the idea.

All this is a reminder that gold remains a dollar story, for now. This is just another reason why the forthcoming G7 meeting in Florida will be so closely watched. The suspicion is that United States, Japanese and European officials won't be able to agree among themselves to muster any more support for the dollar than they did after the November G7 meeting.

A call then for greater exchange rate flexibility sparked a sharp dollar decline. And because the correlation between gold price rises and falls in the trade-weighted dollar has been almost 80 percent over the past three years, the dollar's drop sparked an equally sharp rally in the dollar price of gold too.

If the G7 repeats that trick this weekend, though, the difference is that it could finally boost the price of gold in other currencies too.

Take the price of gold in dollars first. Imagine that the dollar drops to $1.40 to the euro. Extrapolate from the past three years, and that implies a gold price of $480 per ounce, according to JP Morgan number crunchers.

But what about the price of gold in other currencies, such as euros? So far, the European Central Bank has resisted the idea that it should cut interest rates to offset euro appreciation. However, $1.40 to the euro crosses a pain threshold.

If the euro remains at that level, or exceeds it, ECB rate cuts could well become a reality. This would mark a turning point. It would show that other economies are having to fight an increasingly explicit U.S. policy of dollar depreciation with interest rate cuts and a loose monetary policies of their own.

Gold -- which has traded sideways in euros, sterling and yen over the past few years -- could then start to rally in other currencies too.

Breakingviews is Europe's leading financial commentary and analysis service. Its team of financial journalists comments on the most important financial stories of the day, as they break.