Gold prices edged higher on Monday as hopes of a swift Brexit deal boosted sterling and the euro against the dollar, making bullion cheaper for buyers in Britain and the euro zone.
Michel Barnier, the European Union's chief negotiator, said an agreement on Britain's exit from the bloc was "realistic in six to eight weeks".
The resulting weakness of the dollar lifted gold, said Saxo Bank analyst Ole Hansen.
But he added that the metal, which last month fell to a 19-month low of $1,159.96 an ounce, was unlikely to move much higher until it breaks above $1,220.
Spot gold was up 0.1 percent at $1,196.81 an ounce at 1452 GMT, while US gold futures rose 0.2 percent to $1,202.70.
Gold has tumbled more than 12 percent from a high of $1,365.23 in April as trade disputes, currency weakness in emerging markets and rising US interest rates have driven a dollar rally.
In the latest trade tensions, US President Donald Trump said on Friday that he was ready to impose tariffs on virtually all Chinese imports, prompting a threat by China to retaliate.
Since investors assume that the United States has less to lose from a trade war, this has supported the dollar and weakened the yuan, which was again lower on Monday, putting downward pressure on gold because China is the world's biggest gold consumer.
Also helping to maintain dollar strength was strong US jobs data on Friday, which suggested that the Federal Reserve will continue to raise interest rates.
Higher interest rates hurt gold because they increase bond yields, making non-yielding bullion less attractive, and tend to boost the dollar. A rate increase is expected this month.
Against this backdrop, gold investors are pessimistic.
Hedge funds and money managers have ramped up bets on lower prices, with their net short position in Comex gold the biggest since the data began in 2006.
Meanwhile, holdings of gold-backed exchange-traded funds are down almost 5 million ounces, or 8.6 percent, from a May high.
"We could see a first positive signal only if prices return above $1,200, with space for further recoveries to $1,210 and $1,230," said ActivTrades analyst Carlo Alberto De Casa. In other precious metals, spot silver was up 0.4 percent at $14.16, platinum rose 1.6 percent to $791.49 and palladium was up 0.8 percent at $988.36.
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