By Clara Denina
Spot gold gained 0.6 percent to $1,270.20 an ounce at 1153 GMT. U.S. gold futures rose $8.70 to $1,271.50 an ounce.
Spot prices had shed about 7 percent over the past three weeks, as markets re-priced the likelihood of a Federal Reserve's rate hike in December.
The metal is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets.
However, a retreat in the dollar, which fell 0.3 percent against a basket of six main currencies after U.S. consumer prices showed a moderation in underlying inflation, prompted markets to trim bets on a December Federal Reserve rate hike.
Fed fund futures imply around a 65 percent probability of the Federal Reserve raising interest rates by December, down from 70 percent before the CPI data.
"The market is keeping an eye on the potential rate hike in December, which we don't expect because once we get close to the meeting, the Fed will see that key figures are not doing well enough to justify another rate hike and there will be some support for gold," said Danske Bank senior analyst Jens Pedersen.
A European Central Bank's policy meeting on Thursday will also be monitored by markets, Pedersen said.
The metal was also benefiting from lower European shares, indicating waning investor appetite for risk.
"We remain relatively negative on gold short term despite a stronger start to the week," INTL FCStone said in a note.
"We expect further dollar strengthening going into Q4 on account of an election victory for Hillary Clinton along with the likelihood of a Fed rate hike."
Spot silver rose 1 percent to a one-week high of $17.77 an ounce.
Platinum rose 1 percent to $950 an ounce and palladium gained 0.6 percent to $642.22 an ounce.
(Additional reporting by Apeksha Nair in Bengaluru; Editing by William Hardy and Louise Heavens)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)