Gold prices rose on Tuesday as the dollar weakened on expectations that the U.S. Federal Reserve will not raise interest rates at its September policy meeting.
Spot gold rose 1.76 percent to $1,349.64 an ounce while U.S. gold futures settled up $27.30 an ounce at $1,354 and ounce and were last 2.07 percent higher at $1,354.20, after hitting their highest since August 26.
The dollar index was last down 1.03 percent against a basket of currencies at 94.86.
The metal hit a two-month low of $1,301.91 last Thursday on prospects that a strong non-farm payrolls report for August could put the Fed on track to raise rates soon. Gold bounced back, however, when the data missed expectations.
"An isolated rate hike in September would not have a substantial negative impact on gold," Danske Bank senior analyst Jens Pedersen said.
"What would be important for the gold market is whether a rate hike this year signals that now the Fed is ready to speed up the hiking cycle, because then the whole normalization of rates would be back on the agenda."
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which the metal is priced.
New U.S. data releases and any speeches from Federal Reserve officials will be watched closely for clues as to the timing of any rate increases.
"The idea that the Fed is going to move, if not in September but in October, is limiting people from buying gold," said Dominic Schnider of UBS Wealth Management in Hong Kong, adding that prices could drop below $1,300 in the short term, with a good resistance level of $1,275.
Spot gold may retrace to a support at $1,315 per ounce, as it failed again to break through resistance at $1,330, according to Reuters technical analyst Wang Tao.
Spot silver was up 2.8 percent at $20.04.
Platinum was up 2.35 percent at $1,093.90 an ounce. Palladium rose 2.61 percent to $696.22.
South Africa's biggest platinum mine workers' union and the industry have failed to reach a deal on pay, the union said on Monday, raising the prospect of industrial action in the world's top producer of the white metal.