Gold climbed back up above the key $2,000 level on Tuesday as the dollar came off last session's peak, while traders hunkered down for Wednesday's U.S. inflation data for cues on future interest rate hikes.
Spot gold rose 0.7% to $2,002.76 per ounce by 11:40 a.m. EDT (15:40 GMT) while U.S. gold futures gained 0.7% to $2,018.00.
Bullion found some respite from a pause in the dollar, following a bounce in the previous session, also helping offset pressure from higher Treasury yields.
"At this stage of the game, the market isn't particularly fussed on whether we get another 25 basis points" from the Federal Reserve in May, said Bart Melek, head of commodity strategies at TD Securities.
"The market is looking at the pivot and signalling lower rates as we move deeper into the second half of 2023."
The prospect of the Fed raising its benchmark interest rate only once more by 25 basis points is a useful starting point but its policy path will depend on incoming data, said New York Fed President John Williams.
Gold shed nearly 1% on Monday after data on Friday indicated a strong pace of U.S. job hiring, raising the chances to around 70% that the Fed will increase rates in May.
Wednesday's U.S. inflation report could yield signs on how long the Fed may continue its campaign against rising prices. Traders will also look for clues from a host of Fed speakers on Tuesday.
Although gold is traditionally considered a hedge against inflation, higher interest rates implemented to rein in rising price pressures hurt the appeal of zero-yield bullion.
Central banks should not halt their fight against inflation because of financial stability risks, IMF chief economist Pierre-Olivier Gourinchas said.
Silver was up 0.7% to $25.08 per ounce, platinum gained 0.9% to $1,000.19 while palladium jumped 3.1% to $1,455.04.
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