Gold prices gained nearly 1% on Thursday as a weaker dollar and lower bond yields drove demand for the precious metal, while investors kept their eyes peeled for U.S. inflation data to gauge the Federal Reserve's next move.
Spot gold was up 0.9% at $1,980.83 per ounce by 2:53 p.m. EDT (18:53 GMT), having touched its highest since March 24 at $1,984.19 earlier. U.S. gold futures settled up 0.7% at $1,997.70.
The dollar index dipped 0.5%, making gold more attractive for overseas buyers, while benchmark 10-year Treasury yields eased.
"Much of this rally continues to be a short covering rally," said Bart Melek, head of commodity strategies at TD Securities. "The catalyst here is the continued expectations that rates in the U.S. will top out."
Data showed U.S. gross domestic product rose 2.6% in the fourth quarter. The Fed's favored inflation gauge, core personal consumption expenditures (PCE), is due on Friday.
Investors will be scanning the data for clues about the path of the U.S. central bank's monetary policy. According to the CME FedWatch tool, markets are pricing in a roughly 50-50 chance of the Fed maintaining rates at current levels at its May meeting.
"Anything below expectations on the core (PCE) would imply that there is less need or requirement for tight monetary policy from the Federal Reserve," Melek said.
Federal Reserve Bank of Boston leader Susan Collins said it seemed likely there would be only one more rate hike this year, while Richmond Fed President Thomas Barkin said inflation remains too high and may take longer than expected to decline.
"We expect the gold price to fall to around $1,900 per troy ounce - previously $1,800 per troy ounce - in the coming months," Commerzbank wrote in a note.
Spot silver rose 1.8% to $23.76 per ounce, platinum added 2% to $986.59 and palladium gained nearly 2% to $1,467.87.
(Reporting by Deep Vakil in Bengaluru; Editing by Kirsten Donovan, Krishna Chandra Eluri and Richard Chang)