Gold prices rebounded more than 1% on Monday after their biggest weekly fall in percentage terms since March 2020, with demand bolstered by a drop in US Treasury yields and a pause in the dollar's rally.

Spot gold rose 0.8% to $1,777.61 an ounce by 1221 GMT while US gold futures gained 0.6% to $1,779.50 per ounce.

"The reversal in some of the strong gains we saw in bond yields last week has supported the market. Adding to that the dollar is trading a tad softer after the recent strength," said Ole Hansen, head of commodities strategy at Saxo Bank.

"We'll see some consolidation here and correction to the upside. Gold needs to break at least above $1,800 and the real battle is probably more around the $1,820 level."

Benchmark US Treasury yields fell to their lowest since late February earlier in the session and the dollar slipped from 10-month peak.

Lower bond returns reduce the opportunity cost of holding non-yielding bullion.

Gold fell more than 6% last week after the US Federal Reserve signalled tapering of its asset purchase programme and brought forward projections for the first post-pandemic interest rate increases into 2023.

"Over the next few months, if inflation readings do come higher consistently, and if we continue to see this progress in the labour market, too, then definitely markets will start pricing in a possible rate hike in 2022," said Metals Focus research consultant Harshal Barot.

Following the US central bank's hawkish turn, focus shifts this week towards a number of Fed speakers, including Chair Jerome Powell, who appears before Congress on Tuesday.

In other precious metals, silver gained 0.7% to $25.97 per ounce. Platinum rose 0.3% to $1,036.81 per ounce, while palladium climbed 1.5% to $2,501.65