Gold prices edged higher on Monday as the dollar remained under pressure, with investors eyeing a big stimulus package under U.S. President Joe Biden's administration.
Spot gold rose 0.2% to $1,855.40 an ounce by 0958 GMT in choppy trade. U.S. gold futures were down 0.1% at $1,854.80.
"It's clear that the economy is quite fragile, so there is a lot of support for fiscal and monetary stimulus, and as such the dollar remains relatively weak, which may underpin gold," said independent analyst Ross Norman.
"The market is looking for a catalyst - we may as well get it this week - we have the FOMC meeting on Wednesday and there's some expectation for interest rates to remain on hold."
The U.S. Federal Reserve's two-day policy meeting starts on Tuesday.
Biden's administration has emphasised the urgency for a $1.9 trillion pandemic relief proposal while trying to calm Republican concerns about the package being too expensive.
"Optimism around a $1.9 trillion fiscal stimulus may fuel expectations of the Fed tapering some of its ongoing support. Any taper talk could steepen the U.S. Treasury yield curve, which may provide support to the dollar, ultimately pressuring gold prices," said Lukman Otunuga, senior research analyst at FXTM.
"However, if the Fed expresses a willingness to maintain its ultra-accommodative monetary policy stance, gold is likely to shine."
Non-yielding gold is considered a hedge against inflation that can result from large stimulus measures.
The dollar held close to one-week lows, making gold cheaper for holders of other currencies.
Norman said that "Asian (gold) buying is beginning to pick up, particularly in China, ahead of the Chinese New Year", adding that this is supportive of gold but not driving prices higher.
Silver gained 0.8% to $25.59 an ounce, platinum was up 0.3% at $1,101.60 and palladium added 0.2% to $2,358.26.
(Reporting by Asha Sistla in Bengaluru Editing by David Goodman) ((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2808; Reuters Messaging: Reuters Messaging: firstname.lastname@example.org))