Gold for immediate delivery rose as much as $1.13, or 0.2 percent, to $617.38 an ounce. It traded at $616.35 an ounce at 11:23 a.m. Mumbai time.

Bullion for February 2007 delivery rose $1.70, or 0.28 percent, to $619.60 an ounce on the Comex division of the New York Mercantile Exchange in after-hours electronic trading at 11:30 a.m. Mumbai time.

Gold for October 2007 delivery fell 6 yen, or 0.25 percent, to 2,361 yen a gram ($622 an ounce) on the Tokyo Commodity Exchange at 3:01 p.m. local time.

Gold in Asia rose for the second day as the U.S. dollar fell against the euro, spurring investors to buy the precious metal as an alternative investment.

The U.S. currency dropped from a three-week high yesterday after a report showed confidence among U.S. homebuilders deteriorated in December, leading traders to increase bets the Federal Reserve will cut interest rates next year. Gold generally moves in the opposite direction of the dollar.

``Gold is rising because of the weak dollar,'' said Kim Sung Gil, a trader at Woori Futures Co.'s overseas futures team in Seoul. ``It seems difficult for the Fed to raise interest rates as most of the economic indexes released in the U.S. have been negative.''

The National Association of Home Builders/Wells Fargo index of sentiment fell to 32 this month from 33 in November, the Washington-based association said. A reading below 50 means most respondents view conditions as poor.

The dollar will drop against the euro through the end of this month as a slump in housing will slow the U.S. economy, according to BNP Paribas SA. The central bank left its benchmark rate unchanged at 5.25 percent this month for the fourth straight meeting, after 17 increases starting in June 2004.

``It's a given that U.S. will lower interest rates next year and dollar will trade weak,'' Ramaswamy Iyer, chief executive officer at Mumbai-based Brics Commodities Pvt. said.

The dollar was at $1.3085 per euro at 11:24 a.m. Mumbai time after reaching $1.3053 yesterday, the strongest since Nov. 24. It reached a 20-month low of $1.3367 per euro on Dec. 4.

`Range-Bound'

Gold typically rises when the dollar falls, as investors try to hedge against erosion in the value of other assets denominated in the currency.

``Gold will largely remain range-bound ahead of the end of the year holidays'' Iyer said. He expects gold to trade between $610 and $620 this month.


In India the price of the metal for February delivery rose 26 rupees, or 0.3 percent, to 9,075 rupees per 10 grams, or 28,223 rupees per ounce, ($629 an ounce) at 11:33 a.m. Mumbai time on the Multi Commodity Exchange.