The spot market turned positive after attracting technical buying around $1,180, a long-term support level.
"We had quite the substantial build in speculative short interest last week. That probably squeezed some of those weak hands out on the technical move," said Mike Dragosits, senior commodity strategist at TD Securities in Toronto.
Also supportive were the hardened stances of Greece and its creditors. This comes after the collapse of talks aimed at preventing a default and possible euro exit, prompting Germany's EU commissioner to say the time had come to prepare for a "state of emergency".
"Greece is certainly keeping a floor under precious metals," Dragosits said.
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The dollar fell 0.2 percent against a basket of major currencies, making dollar-denominated gold cheaper for holders of other currencies.
Investors hoped the Fed could offer a clear signal on the timing of its first interest rate rise in nearly a decade during its June 16-17 policy meeting.
"Yellen can now be a bit more optimistic about growth, maybe she will intimate that the path is being prepared for a rate rise (by year-end)," Societe Generale analyst Robin Bhar said.
A rate increase could boost the dollar, in turn diminishing demand for non-interest-paying gold.
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Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, are at their lowest since 2008, having seen more outflows on Friday.
Physical demand in top consuming region Asia has been weak as a tight price range and better yields elsewhere have kept investors away.
Morgan Stanley Research said in a note that it expects progressively lower gold prices over the next two years, but that "any resumption of debate over Greece's debt position, requirement to support economic growth in Europe generally, via QE (Quantitative Easing); and the escalation of political tension in eastern Europe will prevent a material collapse in prices, in our view."
Silver was up 1.2 percent at $16.11 an ounce, while platinum fell to a six-year low of $1,072.50 an ounce and palladium lost 0.5 percent to $733 an ounce.