“The fact that investment demand has picked up again somewhat of late, coupled with the escalating Syrian conflict, could see the upswing continue,” analysts at Commerzbank AG wrote today in a report.

Russia and Kazakhstan expanded their gold reserves for a 10th straight month in July, data on the International Monetary Fund's website show. Azerbaijan, the Kyrgyz Republic and Guatemala also added to reserves in July, the IMF data show.

Gold slid 17 percent this year through yesterday as some investors lost faith in the metal as a store of value and on speculation that the Federal Reserve will reduce stimulus that helped prices gain for a 12th year in 2012.

Eoin Treacy's view The tide of ETF holdings in gold turned downwards earlier this year and exacerbated the overall weak environment for pricing. However, as gold returned to an approximation of the average cost of production, supply and demand came back into balance.

The rebound from the late June lows is the largest in almost a year and has successfully closed the majority of the overextension relative to the 200-day MA. While time will be required to repair confidence, a break in the short-term progression of higher reaction lows, currently near $1350, would be required to check potential for some additional upside.

The NYSE Arca Gold BUGS Index / Gold ratio retested the region of the 2000 lows in June and has been ranging above 0.165 since. It is now consolidating near the upper side of its two-month range and a clear downward dynamic would be required to question current scope for continued outperformance by gold shares.

In absolute terms, the Gold BUGS Index continues to unwind the oversold condition relative to the 200-day MA; having found at least near-term support in the region of 200 from late June.