Gold prices extended gains in Asian trade Thursday mainly on increased physical buying, a firmer euro against the dollar and also on rising stocks.

Gold for immediate delivery was seen trading at $ 1204.48 an ounce at 12.00 noon Singapore time after dropped as low as $1185 on Wednesday.

U.S. gold futures for August delivery was at $1205.94 an ounce at the Comex division of the New York Mercantile Exchange.

Equity markets across Asia climbed Thursday with Japan's Nikkei jumped nearly 3 percent after U.S. stocks logged their best one-day gain in about six weeks on optimism about the coming earnings season, discouraging speculators from selling gold to cover losses in other markets.

A firmer euro also supported gold. The single currency held near a seven-week high against the dollar on Thursday, with an upbeat day on Wall Street underpinning improved tolerance for risk.

The U.S. dollar index was down 0.30% at $83.83 while the euro was rallying 0.11% to $1.26 vs. the dollar.

Silver, platinum and palladium also bounced from Wednesday's lows.

Meanwhile, world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings were unchanged at 1,316.481. The holdings hit a record at 1,320.436 tons on June 29.

On Wednesday, gold settled slightly higher as investors digested reports that China might stop buying gold and that central banks swapped gold for cash, both of which colored the gold market with uncertainty.

Gold for August delivery closed up $3.80 to $1,198.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,199.30 and as low as $1,185.

China's State Administration of Foreign Exchange said that the country will not add more gold to its reserves, citing dwindling supply and lack of liquidity.

China currently has 1,054 tons of gold in its reserves, just under 2% as compared to the U.S. which has more than 70%. Many analysts were looking to central bank buying, particularly from Asia, as a key support for higher future gold prices