Spot gold rises 1% to 3½ month high; breaches 200-day moving average – CNBC

“The U.S. retail data have taken all the singing and dancing away from the U.S. dollar, which is under heavy selling pressure and hence we are experiencing another massive upward move for the precious metal,” Naeem Aslam, chief market analyst at Ava Trade, said.

“The data represents the most naked form of consumer confidence and it showed that the U.S. consumers are holding back… This has pushed out the rate hike expectations which was the biggest curse for the yellow metal.”

Gold, which as a non-yielding asset tends to benefit from ultra-low rates, has rallied more than 5 percent since a weak U.S. jobs report on Oct. 2 fueled speculation the Fed would postpone its first rate hike in nearly a decade until 2016.

The Fed cited concerns about the global economy when refraining from hiking rates at its September meeting, although Fed Chair Janet Yellen said later the central bank was on track to raise rates this year.

Read MoreGlencore scrambles on asset sales, debt concerns

However, Fed Governor Daniel Tarullo said on Tuesday the Fed should not hike interest rates this year, in comments that point to sharp divisions within the U.S. central bank over America’s readiness for higher rates.

In Asia, home of the main physical gold markets, there was some decent interest in gold overnight, MKS said in a note.

“Gold oscillated between $1,167-1,169 in the lead-up to the Shanghai Gold Exchange open this morning, yet once they came in some decent buying was seen — mainly on Ecomex — which was sufficient to rocket gold through $1170 to $1174, tripping stop buying through the August high of $1170,” it said.

Among other precious metals, silver was up 1.1 percent at $16.08 an ounce, platinum was up 0.2 percent at $989.25 an ounce, and palladium was up 2.2 percent at $694.25 an ounce.