Gold prices ended about 1 percent higher on Wednesday, as losses in U.S. equities and a drop in the U.S. dollar prompted the metal to rebound from the previous session's three-week low.
After earlier range-bound trade with no major U.S. economic data, bullion extended gains in late morning trade as the S&P 500 index fell almost 1 percent on persistent worries over how soon central banks will begin to scale back supportive measures.
Better investment demand, reflected by the absence of fresh outflow from the world's largest gold-backed exchange-traded fund SPDR Gold Trust, also boosted bullion investor sentiment.
"It's a sign that the worst of the money outflows in the gold market is over. We are still not out of the woods but at least it shows that the gloom-and-doom forecast of $1,000 gold is unrealistic for now,'' said Bill O'Neill, partner at commodities investment firm LOGIC Advisors
Spot gold rose 0.6 percent at $1,387 an ounce. U.S. gold futures closed $15 an ounce higher to $1,392.
Bullion hit a three-week low at $1,367 on Tuesday after lack of new economic stimulus from the Bank of Japan fueled worries that other central banks may also withdraw their support, denting bullion's inflation-hedge appeal.