Gold rose Thursday on a combination of rallying crude oil, a decline in the dollar and an inflow into a major exchange-traded fund, with volume muted amid caution over Japan's nuclear crisis.
A wave of cross-asset buying lifted gold. Global equity markets rebounded after three days of selling despite Japan, and oil rallied more than 3 per cent on unrest in the Middle East and North Africa.
"If more uncertainty does play out in the marketplace, we may finally see gold catch fire, and if the dollar continues to fall, I think gold will continue to find support," said Jeffrey Pritchard, analyst at futures broker Altavest.
Sentiment also improved after data showed U.S. consumer prices rose at their fastest pace in more than 1-1/2 years in February, even as most economists agreed inflation pressures remained generally contained.
Spot gold rose 0.3 per cent to $1,403.32 an ounce by 2:08 p.m. ET.
U.S. gold futures for April settled up $8.1 at $1,404.2 an ounce. U.S. COMEX trade was about three times weaker than Wednesday's volume and one-third lower than its 30-day average, preliminary Reuters data showed.
Spot silver traded in lockstep with gold but was later down 0.2 per cent at $34.28 an ounce.
Prices of gold put options were bid over calls, as bullion investors used a strategy combining options and futures to protect against downside risk, floor traders said.
"Since we've had such a big move up recently, investors buy puts and sell calls to lock in what they have," COMEX gold options floor trader Jonathan Jossen said.
Premiums for gold bars rose to as much as $2 an ounce in Tokyo, double from earlier this week, as a record-high yen boosted demand and supply tightened.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust , said its holdings edged up to 1,217.295 tonnes by March 16 from 1,212.745 tonnes by March 15, their lowest since May of last year.
Platinum and palladium fell as the market fretted about a loss of demand due to car plant closures in Japan. Platinum and palladium tumbled to 3-1/2-month lows of $1,654 and $684.50 an ounce respectively, before turning higher.
Platinum gained 0.7 per cent to $1,697.99 an ounce and palladium rebounded 2.2 per cent to $710 an ounce.