Gold futures advanced a tad higher on Wednesday, by far its best level in little over a week, on a weakening US dollar and Iran's pronouncement of its progress in its nuclear program.

As of 0015 GMT, spot gold inched 0.2 per cent to $1,606.09 an ounce, its biggest daily gain in more than two months.

Spot silver was mostly unchanged at $29.62, preserving its 6.4 per cent improvement in the previous session, of which it was its biggest one-day hike in over three years.

Favourable data from the U.S. and Germany fuelled the renewed investor appetite, triggering a corresponding improvement in stocks, commodities and the euro.

Iran had tested its first nuclear fuel rod that was inserted into the core of Tehran's atomic-research reactor, the Iranian Students News Agency said on Tuesday.

The dollar index, which tracks the U.S. unit against six major currencies, dropped to 79.553 from last week.

A trader noted that gold's early Wednesday feat is a recovery from its rotten performance at the end of 2011. The safe haven yellow metal closed lower for six consecutive sessions in late December, but closed higher in the last trading day of 2011. Gold finished 2011 with a 10 per cent gain for the year.

Central banks purchased 350 tonnes of the yellow metal from January to November of 2011, according to the International Monetary Fund. Turkey's gold buying binge in November helped pushed the statistics to rise.

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