Gold rose as the dollar came off its highs on Wednesday, shrugging off earlier pressure from stronger-than-forecast US inflation and retail sales that added to expectations for near-term US interest rate rises.
US Federal Reserve Chair Janet Yellen said on Tuesday that delaying increases could leave the Fed's policymaking committee behind the curve. On Wednesday, Philadelphia Fed President Patrick Harker repeated his view that the central bank should continue to raise interest rates this year.
Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Spot gold was up 0.2 percent at $1,231.06 an ounce by 3:14 p.m. EST (2014 GMT).
"Given all that news about rates, the market has pretty much shrugged that off. I think the market could easily absorb a quarter-point hike," said Bill O'Neill, co-founder of LOGIC Advisors.
"You're starting to see some of the big fund players come back into the market."
The world's largest physically-backed gold fund, SPDR Gold Shares, has seen inflows of 18 tonnes so far this year, well below the pace of increases a year ago.
US gold futures for April delivery settled up 0.6 percent at $1,233.10.
Among other precious metals, palladium was up 0.9 pct at $786.15 an ounce, after rising to a three-week high at $791.20, bucking the falling trend among other precious metals to rise in line with other cyclical assets.
Spot silver was down 0.05 percent at $17.94, while platinum was down 0.2 percent at $1,002.05.
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