Spot gold was up 0.43 percent at $1,322.51 an ounce at 10:09 a.m. ET after touching $1,326.56 on Wednesday, the highest since Sept. 15. U.S. gold futures for February delivery were 0.3 percent higher at $1,323.30 an ounce.
Gold has rallied by more than $80 since a low in mid-December, helped by a weaker dollar, but will struggle to rise much further in the short term, said Saxo Bank analyst Ole Hansen. "We see gold higher this year but it really is in need of a correction to test the strength of this move," he said.
Several factors were supporting prices, including a dip in global stock markets this week following a spectacular rally. "A highly-anticipated stock market correction is providing support on dips which continues to support the bullish gold narrative," said Oanda trader Stephen Innes.
"Rising oil prices and strong global growth also suggest gold will remain supported as investors look for inflation protection," he said.
Oil prices were near three-year highs on Thursday and industrial metals such as copper and aluminium were close to multi-year peaks, which will drive up the cost of goods and services. Demand for gold in China would also be strong ahead of the Chinese Lunar New year holiday beginning on Feb. 15, said MKS PAMP trader Alex Thorndike.
"As Chinese seasonal buying picks up, the down-side should remain supported into February. We feel that a $1,300-1,335 range should hold or the short term," he said in a note.
Among other precious metals, spot silver was up 0.24 percent at $17.004 an ounce from a two week low of $16.86 on Wednesday. Platinum was 1.13 percent higher at $982 an ounce after touching $982.10, the highest since Sept. 15. Palladium was 0.11 percent lower at $1,080.22, down from a record high of $1,111.40 on Tuesday.