The US benchmark 10-year Treasury yield was hovering near a one-month low, while the dollar index held steady.
Spot gold rose 0.1% to $1,893.89 an ounce as of 0331 GMT.
US gold futures rose 0.1% to $1,896.60
“What I’m seeing is the build-up to the FOMC meeting … the Fed can start to discuss the taper and that’s being highlighted,” said Stephen Innes, managing partner at SPI Asset Management.
“The market is still of the opinion that it (the Fed) is heading into a lingering recession and we have the inflationary aspect, which should be relatively positive for gold.”
Thursday’s US Consumer Price Index report is expected to provide more clues about when the Federal Reserve will roll back the monetary stimulus. The ECB policy meeting is also scheduled for the same day.
The US central bank is expected to hold its policy meeting next week.
US Treasury Secretary Janet Yellen said on Sunday that a slightly higher interest rate environment “would be a plus for society’s outlook and the Fed’s outlook.”
Data out of China showed May factory gate prices rose at the fastest pace in 12 years, while consumer prices rose for the third straight month.
“We expect further gains (for gold) in the coming months amid rising US Treasury real yields, a weakening US dollar and rising inflation amid new waves of COVID-19 infections,” Fitch Solutions said in a note. Fitch Solutions said in a note.
Among other precious metals, silver rose 0.2% to $27.68 an ounce, palladium held steady at $2,808.75, while platinum rose 0.1% to $1,162.57.
(Reporting by Brijesh Patel in Bengaluru)
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