Gold gained on Wednesday, lifted by soothing words from Federal Reserve Chair Jerome Powell who said inflation would not be the only determinant of interest rate decisions and the central bank would not rush into hiking interest rates.
Spot gold rose 0.3% to $1,782.96 per ounce by 1:42 p.m. EDT (1742 GMT). U.S. gold futures settled up 0.3% at $1,783.40.
Powell's words on Tuesday calmed investors who had worried about policy tightening following last week's hawkish turn by the Fed.
Still, the precious metal has failed to reverse last week's 6% drop as expectations of Fed policy tightening have taken hold in markets. Higher interest rates translate into a reduced opportunity cost of holding bullion, which pays no interest.
But David Meger, director of metals trading at High Ridge Futures, said it was not a foregone conclusion the Fed would move to raise interest rates or reduce asset purchases as quickly as last week's meeting suggested.
"We're clearly trading in a very accommodative environment that will underpin gold prices (and) overall it's still too early to start making mention of reduction in asset purchases and increases in interest rates," Meger said.
Gold also benefited from a subdued dollar, which hit a near one-week trough earlier in the session, boosting gold's appeal for holders of other currencies.
Technicals were supportive too, Quantitative Commodity Research analyst Peter Fertig said, noting gold appeared to have bottomed out from last week's selloff.
While the gold market's pricing for Fed hikes could prove too hawkish, the underlying inflation trends will likely remain distorted for months, inhibiting positive flows into gold for now, TD Securities analysts said in a note.
Elsewhere, silver rose 1.1% to $26.02 per ounce and palladium climbed 2.5% to $2,620.12. Platinum was up 1.1% at $1,091.43.