Gold futures on the COMEX Division of the New York Mercantile Exchange regained some momentum on Tuesday, hitting a three-week high, lifted by a strong rally in U. S. equity market and signs that European leaders are taking more steps to stem the region's debt woes.

The most active gold contract for February delivery jumped 23.4 dollars, or 1.5 percent, to 1,631.5 dollars per ounce.

Market analysts said that a well-received Greek debt auction and more signs that European leaders are making more efforts to deal with the region's debt problems helped lift the euro.

Meanwhile, a weaker U.S. currency helped in driving up the price of oil, gold and other dollar-denominated commodities.

A trader said that gold followed other commodities and equity market higher on Tuesday, lifted by a bullish forecast by Aluminum Company Alcoa which pointed to a stronger global economy.

Meanwhile, more and more signs points to a surge in demand for gold as an investment and jewelry after prices fell 10 percent in December.

"I feel the late 2011 selloff in precious metals should and will be seen as a bargain buying opportunity straight ahead in 2012, especially as we begin to close in on the Indian Festival season which happens in the middle of Q1," said Mike Daly, a gold specialist with PFGbest here in Chicago.

Silver for March delivery surged 1.033 dollars, or 3.6 percent, to 29.815 dollars per ounce.