BENGALURU - Gold prices climbed on Tuesday, supported by a weaker U.S. dollar and buying after a recent price slump.
Spot gold was up 0.4 percent at $1,210.99 an ounce at 0814 GMT, after earlier hitting $1,213.81.
U.S. gold futures were flat at $1,217.6 an ounce.
"The slightly improved sentiment for gold has most likely been encouraged by some weakness in the dollar," said Jameel Ahmad, head of global currency and market research at FXTM.
Gold prices, which have declined nearly 12 percent since mid-April mainly due to a strong dollar, have largely failed to benefit from recent political uncertainty surrounding markets, as tensions directed safe-haven flows into the dollar, investors said.
The U.S. dollar, in which gold is priced, dipped against major peers on Tuesday, but expectations for further interest rate hikes in the United States limited downside for the greenback and capped gains in gold.
Meanwhile, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.78 percent to 788.71 tonnes on Monday.
"The overall sentiment remains weak in light of ETF reducing positions, strong dollar and rate hikes," said Helen Lau, analyst at Argonaut Securities.
Asian shares ticked higher on Tuesday, lifted by a rebound in battered Chinese stock markets, but investors remained cautious on developments on the U.S.-China trade war front and impact from the first set of U.S. sanctions on Iran.
The Trump administration will aggressively enforce economic sanctions that it is re-imposing on Iran this week and expects the measures to have a significant impact on the Iranian economy, senior U.S. administration officials said on Monday.
Those sanctions include precious metals, U.S. bank notes, steel and coal.
"We believe a reversal in gold prices is in the offing, as speculation of a trade war and Iranian sanctions are turning into reality. Further, record short investors positions in gold strengthens our conviction of a price recovery in H2," ANZ analysts said in a note.
U.S. data from last week showed investors added 13,931 contracts to their net short position in the week to July 31, bringing it to 41,087 contracts, the biggest since records became publicly available in 2006.
In other precious metals, silver rose 0.9 percent to $15.39 an ounce. Platinum gained 0.9 percent to $828.49 per ounce, while palladium was 0.7 percent higher at $910 an ounce.