Gold rose on Tuesday as stock markets flattened and commodities picked up across the board, though gains were capped by caution as investors awaited clearer signals on the timing of a U.S. interest rate rise.
An early retreat in the dollar also lifted gold after it fell for a third straight week last week. The U.S. currency was last flat and under pressure from lingering worries about whether U.S. authorities are comfortable with its recent strength.
U.S. gold futures for August delivery settled up $4 an ounce at $1,177.60 an ounce, while was rose 0.3 percent to $1,177 an ounce.
"The market is really dollar-driven at the moment," said Afshin Nabavi, MKS's head of trading. "(But) I don't think the fall in gold is over. We're not seeing any kind of real interest on the physical front, so for me it points to an eventual breach of $1,150."
"For the moment, everyone's cautious. We're still stuck in a range, but it's getting lower and lower -- it's probably at $1,150-$1,185 for the time being. We just have to see what news comes out of the United States."
Gold fell to $1,162.35 on Friday, its lowest since March 19, after upbeat U.S. payrolls data bolstered expectations that the Federal Reserve would lift rates for the first time in nearly a decade in September.
That would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Intensifying speculation that the Fed could raise rates sooner than many expect put pressure on stocks in Europe and Asia on Tuesday, though this failed to give the dollar a significant boost.
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Commodities were generally stronger, with benchmark Brent crude oil futures up 2.3 percent and copper prices higher.
Investor positioning continued to reflect bearish sentiment. Holdings of SPDR Gold Trust, the world's top gold-backed exchange-traded fund, are at their lowest since mid-January, undermining any gains in the metal.
In the physical markets, there were signs of bargain-hunting by Chinese consumers after Friday's drop in prices. Premiums on the Shanghai Gold Exchange were about $2.50 an ounce to the global benchmark, up slightly from $1.50 to $2 last week.
Expectations of a further drop in prices and better returns from surging equities in China have tamed demand for gold in Asia despite recent price declines.