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The dollar sank to a 10-month low against a basket of currencies, making dollar-denominated metals cheaper for holders of other currencies, which could boost demand.
"Indian imports are rising after the very poor year last year. We expect that trend to continue even with the tax changes."
Data from consultancy GFMS shows India's gold imports climbed to an estimated 75 tonnes in June from 22.7 tonnes a year ago. For the first half of the year imports rose to 514 tonnes, up 161 per cent from a year earlier.
Weighing on the dollar is the collapse of U.S. President Donald Trump's efforts to deliver a new healthcare bill in a market deeply worried by the pace of America's economic growth.
"The Fed is unlikely to be able to increase rates again soon, possibly not again this year, and it will certainly not rush to reduce its balance sheet," ICBC Standard Bank analysts said in a note.
However, investors are still retreating from physical gold. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, slipped to 827.07 tonnes on Monday, down from 828.84 tonnes on Friday.
On the technical front, resistance kicks in at $1,245-$1,247, the 55-day and 100-day moving averages respectively. Those are followed by $1,250, a Fibonacci retracement level. Support is around $1,230, near the 21-day and 200-day moving averages.
Elsewhere, silver gained 0.4 per cent to $16.13 an ounce after touching a two-week high at $16.23.
Platinum slid 0.2 per cent to $920.24 while palladium ceded 0.4 per cent $862.00.