"The (Fed) meeting this week will dictate price action for the precious metals," said Samuel Laughlin, a metals dealer at MKS Group.
"Market consensus is for a June 2015 rate increase. However, any Fed comment hinting at an earlier rise would put further downward pressure on the metals."
U.S. gold futures for December delivery settled $3.60 higher at $1,235.10 an ounce.
Spot gold fell to $1,225.30 an ounce, its lowest since January, early on Monday before climbing 0.5 percent on balance to $1,234. Last week, gold fell 3 percent as the dollar index posted its ninth straight weekly gain.
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Traders said the small gain could be due to safe-haven bids after Asian stocks fell to a five-week low due to a batch of weak data out of China.
Unwinding of some short positions, which have built up significantly in the past few weeks, could also be a factor in providing some support on Monday.
But investor sentiment towards gold remains weak, with hedge funds and money managers cutting bullish futures and option bets in gold to their lowest in nearly three months, according to data from the Commodity Futures Trading Commission on Friday.
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Dollar strength and weak physical demand are also weighing on bullion. Asia - the top gold-consuming region - has not shown too much interest in buying the metal at lower prices as buyers expect further declines.
"There is still very little interest from China," said ANZ analyst Victor Thianpiriya. China is the biggest buyer of gold and robust buying in the country could lend support to global gold prices.
Thianpiriya said the sluggish demand was not, however, isolated to China.