Gold prices held steady on Monday as expectations that the U.S. Federal Reserve will pause its multi-year interest rate hike cycle, were offset by a recovery in investor appetite for risk.
Spot gold was trading up 0.1 percent at $1,282.31 per ounce by 0306 GMT, while U.S. gold futures were steady at $1,282 per ounce.
"Dovish signals (from the Fed) have kept dollar strength in check, helping gold. But on the other hand, we have seen them easing bearish sentiments in equity markets," said Benjamin Lu, analyst at Phillip Futures, Singapore.
Less than two weeks ahead of the U.S. central bank's first policy meeting of the new year, Federal Reserve officials have left little doubt that they want to stop raising interest rates - at least for a while.
Slower global growth, a stock meltdown last quarter, and a partial U.S. government shutdown that threatens consumer confidence and spending have many in the Fed worried.
"We have seen very positive conditions in U.S. equities and the dollar has also seen a series of positive trades. All these competing influences have capped the safe-haven appeal," Lu said, adding that gold was facing strong technical resistance at $1,300 levels.
Gold has risen more than 10 percent since touching 1-1/2-year lows in mid August, mainly due to tumultuous equity markets and a softer dollar.
Asian markets were steady on Monday, after Wall Street posted a fourth straight week of gains last week.
"On the longer run, we are still very positive on gold on a synchronised slowdown in global economic conditions and geopolitical uncertainties," Lu said.
Data on Monday showed the Chinese economy slowed at the end of last year, underlining the urgent need for more stimulus as Beijing wrestles with the United States over trade. [MKTS/GLOB]
Investors are also waiting to hear British Prime Minister Theresa May's 'Plan B' for Brexit, which is due to be presented to parliament later on Monday, after her deal was rejected by lawmakers last week.
Reflecting investor appetite for gold, holdings of SPDR Gold, the largest gold based exchange traded fund, rose 1.5 percent on Friday to 809.76 tonnes.
Meanwhile, spot palladium, which hit a record high of $1,434.50 last week, was up 0.4 percent at $1,382 on Monday.
"Palladium has eased lower as investors took profits after the recent strong run," ANZ analysts said in a note.
Palladium has risen 9.5 percent so far this month on supply concerns in South Africa and Russia, which are keeping the market tight amid strong demand, the note said.
Spot silver was steady at $15.33, while spot platinum fell 2.3 percent to $796.