Spot gold rose to $510.50/511.00 an ounce in afternoon trade from $507.50/508.30 late in New York on Tuesday, when gold rose nearly $5.00 on fund buying.
"It seems the market wants to retest the previous high. It wants to go up to $518 but I am not too sure whether we are going to break that level," said a dealer in Singapore, referring to a level last seen two weeks ago.
"Liquidity is very thin but there's a little bit of buying. Charities, it is pointing upward," he said. Firm Tokyo futures also supported the price but volumes were thin with many players away on holiday.
London markets reopen later on Wednesday after the Christmas holiday.
Gold, used in jewellery and for investment, reached its highest level in nearly 25 years on December 12 at $540.90 as funds poured money into precious metals on worries about rising energy costs, fears of terrorist attacks and dollar stability.
Fundamentals remain positive for the metal with investors, especially in Asia, keen to diversify with more commodities, said dealers, who expected gold to target December's high in 2006.
Benchmark December 2006 gold delivery on the Tokyo Commodity Exchange rose 21 yen per gram to 1,951 yen as a weaker yen ignited fund buying amid views the market had reached a bottom.
The benchmark contract fell to 1,830 yen on December 16 after peaking at an 18-year high of 2,155 yen on December 12, in a reflection of the yen's rebound and after TOCOM raised margin requirements to curb volatility.
There was a lack of buying on the physical sector but dealers noted sales of scrap gold in Singapore, a centre for bullion trading in Southeast Asia.
"Apparently at these levels, people are still bullish," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore.
"My side is slow, but I still see some scrap gold," said Beh, who said premiums for gold bars were unchanged at between 10 and 30 cents an ounce to the spot London price.
In other precious metals, platinum rose to $968/973 an ounce from $965/969 late in New York. Palladium was steady at $255/259 an ounce.
Silver edged up to $8.75/8.79 an ounce from $8.71/8.74 late in the US market.