OKYO (Reuters) - Gold prices steadied on Thursday and hovered near 18-month highs hit the day before when the dollar slid, with optimism about the global economy prompting investors to buy riskier and alternative assets. Traders said the correlation between the dollar and gold has deepened as gains in bullion accelerated, with currency dealers also taking cues from the gold market to bet on the greenback's weakness. Traders were closely watching the dollar's move against the euro to gauge whether gold's rally will be sustainable and how far prices can rise. "I expect gold prices to extend gains as long as the broad dollar weakness continues, but with a particular focus on euro/dollar moves," said Masato Miyanaga, a senior adviser at H.S. Futures in Tokyo. He said he expected the euro/dollar near-term target to be $1.485, after which gold may see a correction if the euro eases from that level. Spot gold inched up 0.1 percent to $1,017.70 an ounce as of 0306 GMT, compared with New York's notional close of $1,016.70. It rose as high as $1,020.50 an ounce on Wednesday, its highest since March 2008. U.S. gold futures for December delivery were barely changed at $1,019.6 an ounce from $1,020.20 on the COMEX division of the New York Mercantile Exchange. The contract reached a high of $1,023.30 on Wednesday, unseen

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