Gold prices rose on Wednesday on expectations of monetary policy easing from leading central banks to shore up the global economy, though a stronger dollar curbed gains.
Spot gold was up 0.4% at $1,422.05 an ounce but still short of last week's peak at $1,452.60. U.S. gold futures rose $1.90 to $1,423.60.
Continued strong investment interest and buying in gold, expectations of interest rate cuts, high geopolitical tensions regarding Iran and a gloomy global economic outlook are propping up gold prices today, said Commerzbank analyst Carsten Fritsch.
The European Central Bank (ECB) is expected to signal easier monetary policy when it meets on Thursday. Investors are also looking ahead to the U.S. Federal Reserve's July 30-31 policy meeting, at which it is expected to cut its overnight benchmark lending rate.
Futures remain 100% priced for a rate cut of 25 basis points from the Fed next week and even imply an 18% chance of 50 basis points.
Concerns about tepid economic growth have prompted central banks around the world to review their stance on monetary policy. The IMF on Tuesday lowered its forecast for global growth this year and next, warning that more U.S.-China tariffs, auto tariffs or a disorderly Brexit could hit growth, weaken investment and disrupt supply chains.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Against a basket of other currencies, the U.S. dollar edged up to a five-week high of 97.755 after gains of nearly 0.5% the previous day.
Reuters technical analyst Wang Tao said that spot gold looked neutral in a narrow range of $1,412-$1,427 and a breakout could suggest a direction.