| NEW YORK
NEW YORK Gold rose to its highest level in nearly three months on Wednesday, defying a stronger dollar, as a combination of fund buying, physical demand and technical support lifted the metal above $1,150 an ounce.
Other precious metals also took the lead from gold, with silver climbing to its firmest since January, while palladium and platinum also jumped to their highest since 2008.
Bullion's gains in the face of a stronger greenback indicate that the negative correlation between the metal and the dollar has lessened as economic uncertainties prompted risk-averse investors pile into gold as a safe haven.
A stronger greenback usually makes dollar-denominated gold more expensive to non-U.S. investors, and the metal is also seen as an alternative global currency to the U.S. dollar.
Adam Klopfenstein, senior market strategist at Lind-Waldock, said a successful $21 billion auction of 10-year U.S. Treasury notes boosted expectations of lower interest rates.
Gold could keep rising despite the dollar's strength, he added.
"People want to own commodities and things that are priced in U.S. dollars, because the microscope is now on how the U.S. economic data-points fare better than the euro-zone's."
Spot gold peaked at $1,152.75 an ounce, its highest since mid-January, and was at $1,149.55 an ounce at 2:37 p.m. EDT (1837 GMT), against $1,133.20 late in New York on Tuesday.
The euro hit its lowest in more than a week against the dollar on renewed concerns over Greece's ability to tackle its debt crisis.
"The dollar is not the sole determinant of gold prices -- it's just a very influential one. This denotes strong underlying strength in the gold market, and it indicates that other factors in the market are very strong," said James Steel, chief commodities analyst at HSBC.
Steel said that the inverse relationship between gold and the dollar will assert itself in the long run, even though the two could be out of sync for weeks or even months.
Traders report Indian jewelers are stocking up for the wedding season in the world's largest gold consumer.
Euro-priced gold hit a record high of 863.29 euros an ounce, and was last at 862.48 euros against 846.04 euros late on Tuesday.
CitiFX strategists said in a note that gold's Tuesday close above its short-term reverse head-and-shoulder neckline at $1,133 suggests that the metal is currently targeting $1,242 an ounce, above its current all-time at $1,126.10 on December 3.
U.S. June gold futures settled up $17, or 1.5 percent, at $1,153 an ounce on the COMEX division of the NYMEX.
LOW INTEREST RATES HELP
Gold prices are also being supported by expectations interest rates will remain low for an extended period, which will keep the opportunity cost of holding gold low.
Minutes from the U.S. Federal Reserve's last meeting suggested the Fed could keep interest rates ultra-low for even longer than investors expect if the economic outlook worsens or inflation drops.
Among other commodities, platinum group metals benefited from expectations for an economic recovery, with dealers reporting good demand for palladium in particular from Japanese car makers.
Platinum hit its highest since August 2008 at $1,723 an ounce and was last at $1,701 an ounce against $1,697.50 on Tuesday. Palladium hit a two-year high at $511.50 and was at $506 against $504.50 previously.
Silver was at $18.18 an ounce versus $17.88, having hit $18.23, its highest since late January.
(Additional reporting by Jan Harvey and Rebekah Curtis in London; Editing by Marguerita Choy)