(REUTERS) -- Gold rose around 1 percent on Wednesday, breaking ranks with the euro as renewed hedge fund and technical buying put the precious metal on track for its fourth straight day of gains.

Bullion reversed early losses on rising crude oil prices after European governments agreed in principle to ban imports of Iranian oil. Gold has more than recovered from last week's losses that briefly sent it into a bear market.

Gold had been trading in virtual lockstep with the euro and the S&P 500 U.S. stock index in the last two months. But on Wednesday bullion hit a two-week high even as the euro fell sharply against the dollar and the S&P 500 slipped.

Gold is going to decouple from the euro as a risk asset, said Sean McGillivray, head of asset allocation of Great Pacific Wealth Management.

When investors were worried, they sold the euro, industrial commodities and gold was tied into that. But gold can easily trade on its own in 2012, McGillivray said.

Spot gold was up 0.6 percent at $1,612.05 an ounce by 1:24 p.m. EST, having risen as high as $1,616.40, the highest since December 21.

U.S. COMEX February gold futures were up $13.10 at $1,613.60.

Trading volume in Wednesday's rally was in line with its 30-day moving average and set to be its highest in three weeks, a sign of renewed buying interest after gold fell sharply in thin holiday volume.

Last week, the metal was briefly 20 percent below its record September high, the common definition of a bear market. It had lost as much as 11 percent in December, pressured by year-end liquidation by hedge funds.

Technical buying could spark gold's rally, traders said. The metal is inching closer to its next critical resistance of 200-day moving average at around $1,630 an ounce. The metal had held the chart support for almost three years until December 14.

CitiFX strategists said gold's outlook turned bullish after it held a combination of support at its 55-week moving average, September 2011 lows and its upward channel base on weekly charts.

The correction down on gold has run its course and a rally is now back on the cards, CitiFX said a note.

Also supporting gold was higher crude oil prices, which touched a seven-week high after the EU's preliminary agreement to ban imports of Iranian crude. Escalating tensions between the West with Tehran have appeared to benefit gold.

Silver fell by 1.6 percent on the day to $29.16 an ounce, as investors took profits after a 6 percent rally on Wednesday.

Platinum group metals came under pressure as automakers were expecting lower sales growth in the United States in 2012 because the economy remained weak.

Platinum was last down 0.6 percent at $1,416 an ounce, while palladium dropped 2.3 percent to $644.25 an ounce.