Gold Prices Headed for Strongest January in Three Years

Gold prices, headed for their strongest January in three years, rose Tuesday as fears of a Greek sovereign debt default receded, the dollar weakened and crude oil and copper prices increased.

Greece's prime minister said significant progress had been made at restructuring the nation's massive debt and a final plan could be finalized as early as this weekend.

Expectations were also growing that the European Central Bank will follow the U.S. central bank's move last week, when it vowed to maintain ultra-low interest rates until late 2014, in becoming more accommodative.

Sentiment seems to have improved quite tremendously, I would say. We are now into more bullish territory, more than ever, with the Fed providing enough fundamental support, Dominic Schnider, head of commodity research at UBS Wealth Management, told Reuters.

I think we have good reasons to believe we are going to test $1,805 in the coming day. The Fed was clearly the most important event, said Schnider.

Such hopes lifted global stocks and the Eurozone's single currency, which rose at the expense of the dollar.

Hong Kong's Hang Seng stock index led all major Asian indexes higher with gains of more than one percent. In Europe, France's CAC 40 did likewise, with gains of more than one percent.

The Dollar Index fell 0.38 percent to 79 and the euro hovered around $1.31.

Asian buyers, particularly in China, lifted gold prices as celebrations of the Lunar New Year wound down.

Gold for February delivery gained $6.10 to $1,740.50, while spot gold rose $11.32 to $1,739.22.

Silver for March delivery increased 18 cents to $33.71, while spot silver was up 47 cents to $33.78.