Gold edged higher on Wednesday as uncertainty about Brexit talks, French elections and President Donald Trump's economic policies boosted safe haven buying, offsetting a firmer dollar.
"There are a lot of uncertainties regarding the Trump reflation trade after the failure last week to overhaul Obamacare and uncertainty in Europe with French elections coming up and the official start today of Brexit negotiations," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
"The general picture is still positive with dips seen as buying opportunities," he said.
Prime Minister Theresa May will file formal Brexit divorce papers on Wednesday, pitching the United Kingdom into the unknown and triggering years of uncertain negotiations that will test the endurance of the European Union.
A firmer dollar capped gains, as it pulled off 4-1/2 month lows, analysts and traders said.
Strength in the U.S. currency makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand.
Independent technical analyst Cliff Green said the gold price would need to take a breather after failing to break above its 200-day moving average at $1,260.
"It is possibly highlighting the upper boundary of a new consolidation phase with prices likely to experience a rather choppy, two-way market action in the weeks ahead," Green told the Reuters Global Gold Forum.
"It is certainly a peak for the time being but it is also a pivotal level that if breached could trigger more serious gains later in the year," he said.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which is considered a gauge of investment demand, reported an outflow of 1.8 tons on Tuesday.
"As for the balance of this week, we think that gold will stabilize and possibly push higher given that Tuesday's advance in equities did not have much of an impact in slowing its upward momentum," INTL FCStone analyst Edward Meir said in a note.
"In addition, technicals still look constructive, just as physical demand seems to be improving, particularly out of India."
In other precious metals, palladium prices were down 0.49 percent to $788.60 an ounce, after touching a two-year peak of $815.40 on Friday.
"With a platinum-palladium differential of less than $160, I think it will struggle to rise. It also has a very stretched net long position, which is also at a two-year high," said Commerzbank's Fritsch.