Gold prices rose to a four-week high on Wednesday spurred by strong physical demand in Asia and also helped by the upbeat sentiment in markets in the past two days, which showed a rebound in the euro.
Gold hit a high of $1,646.95 by 08:30 GMT, the highest level since December 13.
Gold has been steadily rising since December 29 last year when it touched the lowest level since July 6.
A weaker dollar in recent days has also increased the appeal of dollar-denominated gold by making it appear cheaper for buyers using other currencies.
Other investors Tuesday were buying gold on the view that struggling growth in China means the country may soon ease its tight-credit policies as investors seek the precious metal as a shield from the potential inflation such policies could bring down the line.
Gold also drew demand from a rise in physical demand for the metal after the market’s recent retreat. This is mostly evident in Asia, where gold is popular during the Asian festive season, such as the Chinese New Year and also wedding season in India.
“Physical investment and jewellery demand has been strong into price falls below $1,650, with Chinese buyers particularly active,” RBS analysts said in a note.