Gold prices hit a one-week high on Tuesday, boosted by a lower dollar after U.S. economic data persuaded investors to reassess the idea of an imminent Fed rate hike and rising security concerns following the bomb blast in Russia.
Gold broke above its 200-day level of 1,261.5 on an intraday basis for the first time since February 27.
The U.S. Institute for Supply Management (ISM) said its index of national factory activity fell to 57.2 in March from 57.7 in February, which was the highest since August 2014, while automakers reported a 1.6 percent fall in U.S. sales last month.
"The dollar's gains could be coming to an end. It has been rising and that's a headwind for the U.S. economy," said Marex Spectron analyst Guy Wolf.
"People are not so worried about inflation, they don't think the Fed is behind the curve. People are not so optimistic about (U.S. President Donald) Trump being able to deliver quickly on his election promises about taxes and infrastructure."
A falling U.S. currency makes dollar-denominated metals cheaper for holders of other currencies.
The blast in a St Petersburg train carriage on Monday that killed 14 people and wounded 50 has fuelled security concerns around the world, triggering interest in gold seen as a safe place to park assets during times of uncertainty.
Investor interest can be seen in holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which climbed 0.53 percent to 836.77 tons on Monday from
832.32 tons on Friday.
"While the European elections, Brexit negotiations and Trump's foreign policies could reignite safe-haven interest, gold is not without hurdles," Standard Chartered analysts said in a note.
"We believe the fragile physical market and Fed rate hikes will create a softer footing for gold prices."
The U.S. Federal Reserve raised interest rates in March. Its next policy meeting is in May.
On the technical front, gold needs to close above the 200-day moving average, currently around $1,259, to gather momentum for $1,263.80, the Feb. 27 peak, chart analysts say.
Spot silver rose 0.38 percent to $18.29 a one-month high. gained 0.37 percent to $955.05 and added 0.11 percent to $803.30.
CNBC's Gina Francolla contributed reporting.