Gold rose on Thursday on data showing rising U.S. inflation, and after the previous day's 1-percent drop triggered renewed physical interest by price-sensitive Asian buyers.
Bullion investors focused on U.S. Labor Department data which showed underlying inflation pressures rose in October, even though that also bolstered expectations of a mid-2015 interest rate hike from the Federal Reserve.
The gold market also ignored other data that showed a strengthening U.S. economy, including rising existing home sales and lower weekly jobless claims.
Bullion dropped on Wednesday after a poll showed weaker support among Swiss voters for a referendum proposal that would force the central bank to boost its gold reserves.
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Dealers said appetite for physical gold among Asian buyers surged after prices fell to a low of $1,175 an ounce.
"We have certainly seen physical demand pick up on dips over the last couple of weeks after gold's aggressive sell-off," said David Meger, director of metals trading at brokerage Vision Financial Markets in Chicago.
was up 0.7 percent at $1,191.44 an ounce, while U.S. gold futures for December delivery settled down $3 an ounce at $1,190.90.
Earlier this month it slid to a 4-1/2 year low at $1,131.85.
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The dollar index eased on Thursday, but the currency held near a seven-year high versus the yen as investors bet that the Federal Reserve will start raising interest rates next year while the Japanese central bank maintains stimulative policies.
A stronger dollar tends to weigh on gold, which is priced in the U.S. unit.
Selling by gold funds resumed after a brief pause this week. The world's largest gold-backed exchange-traded fund, SPDR Gold Shares, said its holdings fell 0.3 percent to 720.91 tons on Wednesday.
Gold exports to China from Switzerland, a major trading and refining center, more than tripled to 42.5 tons last month, Swiss customs data showed.