Spot gold was at $564.40/565.30 an ounce by 1539 GMT, compared with $561.30/562.20 in New York on Tuesday when it rose more than $6 on fund buying and a softer US currency.
"Gold could move up from...where we stand at the moment. I would be surprised to see a massive increase in prices, but a slow creep up towards just below $570 would be on the cards this week," said Michael Widmer, analyst at Macquarie Bank.
"There is still a lot of fund money flowing into the commodities sector," he said, adding that gold might jump to about $620 in the second half of the year.
Commodity index funds had about $80 billion under management towards the end of 2005 and another $8-10 billion might have flowed into those funds in January alone, he said.
Gold has fallen by about two percent from its 25-year high around $575 in early February, but has gained more than 30 percent in one year.
Precious metals spiked last month as investors diversified their portfolios due to global security concerns, worries about the dollar outlook and firm oil prices.
"We have not seen evidence of good physical demand at lower levels. Prices have been primarily driven by funds and, therefore, are vulnerable to sell-offs should funds decide to exit the market," said Yingxi Yu, analyst at Barclays Capital.
"Prices above $560 should give investors more confidence to push gold higher. In the short term we see more upside potential."
She said market sentiment could get an extra boost from news that the Bank of China would allow depositors to buy and sell gold products with their dollar accounts.
Bank of China, the country's top foreign exchange lender, announced the move as part of a new service to retain wealthy clients, a bank official said on Wednesday.
"The strong start has triggered some profit taking overnight but gold has so far held the $560 level and could now look to work towards the $568-$572 resistance band," TheBullionDesk.com said in a daily report.
In other precious metals, platinum fell to $1,044/1,048 from $1,050/1,054 an ounce in New York, but palladium rose to $289/293 from $287/291. Silver was up at $9.83/9.86 from $9.75/9.78.