Gold rose for a second day on Thursday after Federal Reserve officials hinted that U.S. interest rates could rise more slowly than expected, while palladium was lifted to a 16-year high by strong industrial metals markets.
The minutes of the Fed's July 25-26 policy meeting showed some policymakers wished to halt further rate increases until it is clear the trend of soft inflation is transitory.
Gold is sensitive to rising interest rates because they push up bond yields, raising the opportunity cost of holding non-yielding bullion, and tend to strengthen the dollar, in which gold is priced.
The dollar and bond yields fell after the minutes were released but have recouped some losses.
Spot gold rose 0.30 percent at $1,286.51 an ounce after rising 0.9 percent Wednesday.
U.S. gold futures for December delivery settled up $9.50 at $1,292.40 an ounce.
Commerzbank analyst Carsten Fritsch said U.S. President Donald Trump's decision to disband two high-profile business advisory councils also helped gold because it shook confidence
in Trump's ability to enact economic stimulus, lowering expectations of rate rises.