Gold settled higher on Monday after a retreat in the dollar helped prices recover from early losses, though uncertainty over when the Federal Reserve will start trimming its extraordinary stimulus measures limited gains.
While no major policy change is expected when Fed officials meet on Tuesday and Wednesday, most recent U.S. economic data suggests that the beginning of the end of its massive bond-buying program will come sooner rather than later.
"There is going to be some positioning by speculative investors ahead of Wednesday's announcement, so we might see some volatility (and) choppy trading,'' said Mitsubishi analyst Jonathan Butler.
Expectations that the Fed will taper stimulus have already knocked gold prices 25 percent this year—their biggest annual drop in 32 years. Concerns that that retreat may have been overdone led to a flurry of short-covering last week.