Gold rose on Wednesday as the dollar dipped to session lows against the euro and stock markets extended gains, after Spain and France said the common strategy for euro area stability included the adoption of a supervisory mechanism for banks.

The euro quickly recovered ground it lost earlier against the dollar, allowing gold to move back above $1,600 an ounce for the first time since July 10, while stocks rose in Europe and opened higher on Wall Street.

Also on the rise in the price impact of the ECB comments Ewald Nowotny, who said that he saw no grounds for granting the European Fund for Saving the banking license, which would get cheap funding from the ECB, after which the ECB said that the EFS can eventually get a banking license .

Gold has been particularly sensitive to moves in the wider financial markets in the absence of direction from physical demand, which has been weak in recent months. It tends to benefit from dollar weakness and sharper appetite for risk.

Gold has held in a $75 range so far in July, its narrowest monthly spread since April. Weak seasonal buying in some Asian markets, waning inflows into gold-backed exchange-traded funds and caution among investors have limited price gains.

Physical gold traders in number one consumer India stayed on the sidelines after prices extended gains for a third straight day to hit their highest level in more than two weeks.

The cost of the August gold futures on the COMEX today has grown to a value of $1606.4, and then slightly decreased and now stands at 1600.2 dollars per ounce.