Gold traded above $ 1770 an ounce

Gold prices rose back above $1,770 an ounce on Tuesday as the euro hit session highs versus the dollar, and following data that showed central banks added to their bullion holdings in July and August, led by South Korea and Paraguay.

The metal has risen nearly 5 percent so far in September and is set for a fourth straight monthly gain on expectations the Federal Reserve will keep credit flowing through the U.S. economy and interest rates low by buying government bonds.

In the shorter term, gold took support from a recovery in the euro, which swung higher against the dollar in early afternoon trade and extended gains after data showed U.S. house prices rose less than expected in July.  European shares also moved in positive territory, while other commodities, like crude oil and industrial metals, rose.

Data from the International Monetary Fund on Tuesday showed South Korea raised its holdings of gold by nearly 16 metric tonnes (17.63 tons) in July, along with Paraguay, which raised its reserves in July from a few thousand ounces to more than 8 tonnes, continuing the trend among central banks to hold more bullion.

According to the IMF's international finance statistics report, South Korea added 15.988 tonnes of gold to bring its holdings to 70.44 tonnes in July, meaning it has doubled its bullion reserves in the space of a year after being one of the largest purchasers of gold in 2011.

Paraguay raised its holdings by 7.527 tonnes to 8.194 tonnes two months ago, while Venezuela cut its holdings by 3.733 tonnes to 362.053 tonnes in that month.

So far this year, central banks have added a net 262.1 tonnes to their reserves, compared with 203.39 tonnes in the first eight months of 2011.

Turkey has added the most to its holdings, having raised its reserves by 100.2 tonnes in the first eight months of the year, followed by Russia, which has added 53.75 tonnes.

Private investors have also added to their holdings of gold through exchange-traded funds backed by physical metal, which now hold a record 74.06 million ounces.

October futures price of gold on the COMEX is now 1772.50 dollars per ounce.