Gold snapped two days of losses to rise on Monday as renewed weakness in European stocks boosted interest in the metal as an alternative asset, though a tentative recovery in risk appetite in other markets limited its gains.
The metal rebounded sharply after falling to its lowest in over a year earlier this month, as jitters over growth prompted stock markets to sell off aggressively.
A bounce in equities after upbeat housing and consumer sentiment data on Friday helped take the shine off that recovery, but gold's subsequent move lower proved temporary.
U.S. gold futures for April delivery settled $5.70 higher at $1,246.00 an ounce, meanwhile spot gold was last up 0.7 percent at $1,246 an ounce.
"Gold sentiment I would say has moved from negative to neutral, but as long the market continues to expect renewed dollar strength, then the upside seems limited," Saxo Bank's head of commodity research Ole Hansen said.
"I, like most others, am keeping an eye on whether the $1,250/55 (level) can be broken," he said. "If that happens then we should see some additional liquidation of short positions."