Spot gold ended European trade at $433.80/434.50 per troy ounce by 1615 GMT, having hit a high of $433.90 - last seen in early January when bullion scored its highest for the year at $437.50. That compared with $427.00/427.70 at the London market close on Monday.
Dealers said near-term dips on gold could not be ruled out, but the market seemed to be gathering momentum to test higher ground.
"Maybe we will come back to $430 as things calm down, where gold will be a buy again - I can't see that the market will give up all of these gains," a dealer said.
The dollar nursed broad losses on Tuesday as concerns that central banks were diversifying from dollar assets pushed the US currency through key technical levels.
South Korea's central bank said on Monday it planned to diversify its currency reserves, which are the world's fourth largest, into a greater variety of currencies.
Bahrain's central bank governor told Reuters on Tuesday he saw a growing role for the euro in international reserves as Europe's economy started to grow and capture a bigger part of world trade.
Gold analysts have said that bullion, which has struggled to rally decisively since hitting a 16-1/2-year peak in December at $456.75, should gain further this year as they expected the dollar to slide further.
Barclays Capital said in a daily report that current modest levels of speculative exposure on the New York futures market provided the fuel for a further test towards $434.
Also on Tuesday, world gold mining companies' de-hedging activity hit a record level in 2004, but the trend was seen slowing this year, a report sponsored by trade house Mitsui Precious Metals said.
Silver also burst higher to hit a six-week peak of $7.54, lifted by gold's advance and by price gains in the industrial metals market, where copper futures touched 16-year highs on the shifts in currency values.
Silver stood at $7.48/7.51 by 1615 GMT from $7.38/7.41 late in London on Monday.
Platinum group metals also strengthened, with platinum up at $872.00/876.00 from $860.00/865.00, while palladium was at $180.00/184.00.