Gold futures headed higher for a second session Thursday, topping the $635-an-ounce level for the first time in two weeks and supported by an upbeat outlook for the metal's price as well as news that India approved the launch of gold exchange-traded funds.

Gold for February delivery was last up $3.70 at $637 an ounce on the New York Mercantile Exchange after reaching a high of $637.20, the contract's strongest intraday level since Jan. 3.

On Wednesday, the contract rallied more than $7 an ounce to close at a more than two-week high, finding support in firmer oil prices and a weak dollar.

"Hints that inflation is still a threat to the U.S. economy triggered a recovery in gold and silver yesterday, with technical buying adding additional momentum," said James Moore, an analyst at London-based TheBullionDesk.com, in a morning note.
Looking ahead, gold's price should head higher in coming months and aim for the $670s in the first half, precious-metals consultant GFMS said Thursday. The firm said, however, that gold might not be able to exceed its recent record above $725 unless the situation in the Middle East worsens.