Gold prices rose Wednesday after opening the new year with a 2 percent rally on expectations of increasing Asian demand and support from the price of crude oil.
The approach of the lunar New Year is increasing demand for physical gold in Asia and India's wedding season also is boosting demand for physical gold.
As the new year begins, physical demand is evident, UBS analyst Edel Tully wrote in a client note. Our physical sales to India (Tuesday) were about double average levels. The key factor in this market right now is not purely the gold price, but stabilisation in the rupee.
Gold prices got a lift from a surge in the price of crude oil, which is benefiting from Iran's announcement that it has produced nuclear rods, climbed to a six-week high. Crude oil is also rising on tight U.S. supplies and signs that the nation's economic recovery is continuing.
The euro slipped modestly against the dollar after recording its biggest one-day gain on Tuesday in nearly two months against the greenback. On the ICE US Dollar Index, the U.S. currency was up 0.9 percent to 79.99 against a basket of major currencies.
Global stocks were mixed and in the U.S., equity futures pointed to a mixed open as well.
Gold for February delivery was up $7.50 to $1,608, while gold for immediate delivery rose $15.85 to $1,609.59.
Silver for March delivery slipped 5 cents to $29.52, while silver for immediate delivery added 70 cents to $29.53.