LONDON, Aug 20: Gold rose in Europe on Wednesday as strong investor interest in coins and bars and resurgent jewellery demand supported prices after a recent dip.

Gold was at $813.10/814.10 an ounce at 1304 GMT against $810.70/811.90 an ounce late in New York on Tuesday, well above the nine-month low of $773.90 it touched on Friday.

“The stability in prices we have seen over the last few days has been enough to ensure a decent increase in interest from the consumer side,” said Daniel Hynes, metals strategist at Merrill Lynch. “We are approaching a seasonally high demand period as well,” he added.

Demand for certain finished products is so high that refiners are struggling to keep up, analysts say.

Gold climbed to a one-week high in Asia, pulling other precious metals in its wake, as demand picked up in India, the world’s biggest market for gold, and elsewhere on the continent.

Indian buyers are also likely to step up purchases ahead of a series of key religious festivals that culminate in October with Diwali, the Hindu festival of lights.

A slightly firmer tone to the dollar, which is regaining some ground against the euro on Wednesday morning after the previous session’s fall, is limiting gold’s rise, however.

Oil climbed above $116 a barrel as traders eyed US weekly oil stockpile data due out at 1435 GMT for clues as to the future direction of the crude market. Any move in crude prices is likely to impact gold, which is often bought as a hedge against oil-led inflation.

The SPDR Gold Trust, the world’s largest bullion-backed exchange-traded fund, said it recorded its first outflow in two weeks on Aug 19, as its gold holdings dipped one per cent. ETFs issue securities backed by physical commodities, and buying by the funds has represented a major source of demand in recent years. Analysts fear a sell-off of ETFs’ gold holdings could knock spot prices lower.—Reuters