"Gold is not out of the woods yet but yields are a bit lower and the dollar is weaker, especially against the yen and yen-gold has showed a phenomenal correlation since the US election," Ole Hansen, SaxoBank's head of commodity research, said. Gold fell more than 8 percent in November as US Treasury yields rose after Donald Trump's election led to speculation his commitment to infrastructure spending would spur growth.
Spot gold hit $1,159.50 an ounce during the session, the highest since December 14, and was up 1.2 percent at $1,155.45 by 2:32 pm EST (1451 GMT). The metal also notched its biggest daily percentage gain since late September. US gold futures ended the session up 1.5 percent at $1158.1 an ounce. The dollar fell 0.7 percent against a basket of six main currencies, mostly due to the yen's strength and profit taking after recent gains. The benchmark 10-year US Treasury yield slipped to two-week lows as the bond market sell-off fizzled. Among other precious metals, silver was up 0.62 percent at $16.11 an ounce. Platinum was 0.2 percent lower at $895.49, while palladium climbed 1.09 percent to $672.47 an ounce.