Gold rose back above $1,185 an ounce on Monday, recovering from the previous session's five-week low, as investors awaited the Federal Reserve's policy meeting later this week for clues on the timing of a US rate increase.
Some investors are betting the Fed will have to wait until later this year, instead of June as previously expected, before raising rates from record lows. However, signs that policy will be tightened sooner rather than later could still pressure gold.
The metal is down 2 percent this year on expectations for a rate rise, which would lift the opportunity cost of holding non-yielding bullion while boosting the dollar.
Spot gold was up 0.7 percent at $1,187.05 an ounce at 1400 GMT, while US gold futures for June delivery were up $12.40 an ounce at $1,187.40. On Friday, spot prices slipped as low as $1,174.73 an ounce.
"Our economists are not really looking for a rate hike in the second quarter any more, or even the third quarter," ING commodities analyst Hamza Khan said.
"The consensus is certainly that the dollar is not going to be moving significantly higher as a result of the (Fed meeting) - it seems more likely that it is going to move lower, which should be bullish for gold prices."
The dollar steadied on Monday, recovering from another round of disappointing data last week that undermined expectations of a rise in US interest rates.
World shares hit a new high meanwhile as investors looked ahead to central bank meetings this week.
The Fed starts its two-day policy meeting on Tuesday.
"Market consensus does not expect the first rate hike to be announced at this week's meeting, but (Fed) comments are likely going to be closely watched especially in light of Q1 GDP, which is also due to be released this Wednesday," UBS said in a note.
Physical gold demand in the major Asian markets was positive after last week's price fall, dealers said, with Shanghai premiums moving up towards $4 an ounce.
Silver was up 2.6 percent in London trade at $16.09 an ounce, while platinum was up 0.4 percent to $1,126.50 an ounce and palladium was up 1 percent at $778.30 an ounce.