Gold rebounded on Wednesday as the US dollar turned lower, shrugging off a turn higher in global shares and better-than-expected US economic data. Spot gold, lower initially, rose 0.8 percent to $1,241.70 an ounce by 3:14 pm EST (2014 GMT), while US gold futures for April delivery settled up 0.9 percent at $1,241.80 an ounce.
"Gold has clawed back yesterday's losses despite hawkish comments from San Francisco Fed's Williams, a strong ADP number, higher yields, and a steady dollar and stocks," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
San Francisco Federal Reserve President John Williams said there has been no substantial change in his outlook on the US economy or his opinion on the number of times the Fed should raise interest rates this year and next.
"The strong, measured rally over the past two months fuelled by a voracious appetite from the ETF has brought gold agnostics and apostates back into the fold who now devoutly exalt every rally," Wong said.
"Technicians are abuzz about a pennant forming that should resolve in a rally above $1,400 after a stop at $1,320."
While gold faces firm resistance at $1,250-$1,260, "the market has built a solid and supportive base above $1,200" and there is enough risk sentiment and uncertainty to support the metal, HSBC said in a note.
Bullion, seen as a shelter for risk-averse investors, has rallied more than 16 percent this year in the face of tumbling equities and fears of a global economic slowdown.
Assets in SPDR Gold Trust, the world's top gold ETF, rose to the highest since September 2014 on Tuesday.
"We are still in the phase of investors filling their boots and that means the retracement we are seeing in gold is likely to be used as a buying opportunity," Saxo Bank senior manager Ole Hansen said.
Shares on major equity markets hit their highest in nearly two months and US government bond yields touched their highest in almost four weeks as strong US economic data, showing private employers added 214,000 jobs in February, tempered fears of a global economic slowdown.
Investors will be watching more US data to gauge the impact on stocks and the Federal Reserve's monetary policy, with the most important release being non-farm payrolls on Friday.
Platinum fell 0.2 percent to $936.90 an ounce, while silver gained 1.1 percent to $15 and palladium dropped 0.3 percent to $514.44.
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