Gold rose after minutes from the Federal Reserve's June meeting showed officials are ready to unwind its balance sheet.
The Fed outlined a plan to reduce its $4.5 billion balance sheet of bond holdings it accrued while trying to stimulate the economy during and after financial crisis. However, officials were divided on when to start and did not release a timetable.
A stronger dollar makes gold more expensive for holders of other currencies and higher bond yields raise the opportunity cost of holding non-yielding bullion. Interest rate rises meanwhile lead to higher bond yields and tend to boost the dollar.
"We've seen the dollar rebound from recent lows and treasury yields moving higher. That is a very powerful driver of the gold market," Julius Baer analyst Carsten Menke said.