Gold prices rose to their highest in nearly a week on Tuesday as the euro rallied by one per cent versus the dollar, with rising stock markets pointing to a sharper appetite for assets seen as higher risk at the United States currencys expense, Reuters reported.Spot gold was up by 1.3 per cent at $1,612.80 an ounce at 1500 GMT. Prices are within $10 of their 200-day moving average, a key technical level they fell through last week, which is just above $1,621 an ounce."The afternoon rally in risky assets and gold seems to have been spurred by better-than-expected US housing data, which in turn further pushed the US dollar lower," BNP Paribas analyst Anne-Laure Tremblay, said."The rebound in the gold price could prompt some short-covering, and we could retest the 200-day moving average in the coming days," she added.The euro hit its highest since December 13 versus the dollar, helped by a sharp fall in Spanish short-term borrowing costs and by fresh signs that the German economy is holding up in the teeth of the euro zone debt storm.The single currency has been on a steady downward trajectory versus the dollar since it peaked in late October. The dollars gains have weighed on gold, putting the metal on track for its first quarterly loss in more than three years.Confidence in the metal remains fragile as concerns persist that policymakers efforts to address the euro zone debt crisis are inadequate and could keep European assets under pressure."All the bull-run dynamics are still in place, but you have this trend of the strengthening dollar, positive data out of the United States as opposed to weak data out of Europe," VM Group analyst, Carl Firman, said."A strengthening greenback has traditionally seen gold in dollar terms decline. For a safe haven, youre looking at the dollar really. Theres a lot of volatility in gold, in commodities, in other asset classes."European shares extended gains on Tuesday afternoon in thin trading, tracking Wall Street higher on the improved investor sentiment.Gold prices are set to struggle to make up significant ground for the rest of the month, with traders wary of adding to long positions before year-end, analysts said."Profit-taking and year-end book squaring by large investors, including mutual funds and macro hedge funds help explain the recent drop in prices," HSBC, said in a note."Gold prices may stay weak but volatile for the rest of this year, we believe, as trading volume is likely to dry up in the run-up to the year-end holidays."Among other precious metals, silver was up 2.3 per cent at $29.45 an ounce, tracking gold. Spot platinum was up 1.2 per cent at $1,424.50 an ounce, while spot palladium was up 2.8 per cent at $621.00 an ounce. Click here to read full news..