Gold rose to the highest in nearly four weeks on Wednesday as the dollar edged back from a 14-year peak and physical demand from major consumers China and India increased. Spot gold climbed to its highest since December 9 at $1,167.83 an ounce and was up 0.2 percent at $1,161.2 by 2:49 pm EST (1949 GMT). US gold futures settled up 0.3 percent at $1,165.30.
"The dollar index has consolidated and the big outflow from exchange-traded products (ETPs), which has been the biggest headwind for gold in the past few months, has stopped recently," said Julius Baer analyst Carsten Menke. Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 1 percent to 813.87 tonnes on Tuesday. Holdings are down about 14 percent since the US presidential election in November.
Gold prices held their gains after minutes from the Federal Reserve's December meeting showed almost all of the policymakers thought the economy could grow more quickly because of fiscal stimulus under US President-elect Donald Trump's administration. "However, many officials also stressed that there was material uncertainty surrounding the effects of potential fiscal policies," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto.
Among other precious metals, palladium rose by as much as 4.7 percent to $742.60 an ounce, the highest since December 9. Silver was up 0.31 percent at $16.32 an ounce, while platinum turned down 0.09 percent to $936.25, after rising to a four-week high of $950.10 an ounce, extending a 4 percent increase in the previous session.