OREANDA-NEWS. March 26, 2015. Gold hit 2-1/2 week highs on Wednesday as upbeat German sentiment data and weaker than expected U.S. durable goods numbers drove the euro higher against the dollar and as expectations for an imminent U.S. interest rate rise receded.

The euro was up 0.4 percent versus the U.S. currency after a survey on German business morale fuelled expectations that a euro zone economic recovery is strengthening, extending gains after U.S. durable goods data missed expectations.

Spot gold was up 0.4 percent at \\$1,197.50 an ounce by 1438 GMT, having earlier touched its highest since March 6 at \\$1,199.70. U.S. gold futures for April delivery rose by \\$5.70 an ounce to \\$1,197.10.

"(Gold is) grinding higher as traders are reluctant buyers at this stage ... driven by lower bond yields and the current dollar wobble," Saxo Bank's head of commodity research Ole Hansen said.

"It's safe to say that the sentiment has returned to neutral. At the moment, many are struggling with the concept of having to turn bullish again considering the rollercoaster it has been through so far this year."

The metal's five-day rally to Tuesday, its longest since January last year, came after Federal Reserve chair Janet Yellen sounded a cautious note last week on the U.S. economy and potential interest rate increase.

Gold prices had been hurt by expectations for a near-term rate hike, which would lift the opportunity cost of holding non-yielding bullion while boosting the dollar. Gold is highly sensitive to moves in the U.S. currency, in which it is priced.

"A break over the 1.10 euro/dollar level will encourage buyers to test and possibly break the \\$1,200 price point (in gold)," Kitco Metals Inc said in a note on Wednesday.

Physical gold demand in Asia, which supported the market when prices were around \\$1,145-\\$1,155, is looking sparse at current levels and is not providing the cushion seen previously, precious metals house MKS said in a note on Wednesday.

"Further, it feels that this demand is not likely to re-emerge in any meaningful quantities until prices get back around \\$1,170-\\$1,175."

Among other precious metals, silver was up 0.8 percent at \\$17.01 an ounce, while spot platinum gained 0.9 percent to \\$1,146.90 an ounce and spot palladium rose 0.2 percent to \\$763.25 an ounce.