Gold prices hovered close to the key $1,800 level on Monday, supported by a weaker dollar as investors assessed the Federal Reserve's likely response to inflationary pressure after its chair said inflation could last longer than expected.
Spot gold was up 0.3% at $1,797.81 per ounce, as of 0712 GMT. U.S. gold futures gained 0.1% to $1,797.20.
On Friday, the metal rallied to its highest level since early-September before paring gains after Fed Chairman Jerome Powell said the U.S. central bank should start reducing its asset purchases.
"There is some short-term momentum building in gold as some investors look for an inflation hedge and see gold as a potentially provider of that," IG markets analyst Kyle Rodda said, adding that $1,830 is a key resistance level if gold breaks above $1,800.
In the long term, however, Rodda said gold's trajectory hinged mainly on how aggressive central banks would act to contain inflation.
Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for non-yielding bullion.
"Gold's challenge will be whether it can weather an FOMC tapering announcement next week, especially if, as expected, U.S. yields and the dollar start their move higher again," Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA said in a note.
Market participants now eye the Bank of Japan (BoJ) and the European Central Bank (ECB) meetings due on Thursday.
Adding to gold's support, the dollar eased 0.1%, making bullion more appealing to buyers holding other currencies.
On the technical front, gold may retest a resistance at $1,814 per ounce, a break above could lead to a gain to $1,826, according to Reuters technical analyst Wang Tao. Spot silver rose 0.5% to $24.43 per ounce. Platinum was up 0.2% at $1,042.23 and palladium rose 0.6% to $2,033.21.
(Reporting by Nakul Iyer in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips) ((firstname.lastname@example.org; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 0417; Reuters Messaging: email@example.com))