Gold rose to a one-week high on Thursday as Chinese retail investor demand rose and amid uncertainty over the direction of monetary policy in the United States before the announcement of a new chair of the Federal Reserve.
Spot gold was up 0.5 percent to $1,279.31 per ounce at 0344 GMT, after earlier rising to $1,281.43, the highest since Oct. 26.
Higher demand from Chinese retail buyers has raised domestic bullion prices and global prices have risen to narrow the gap, according to Jeffrey Halley, a senior market analyst with OANDA.
"The return of Chinese investor interest in gold at these levels is a welcome vote of confidence for long-suffering gold bulls," said Halley.
U.S. gold futures edged up 0.3 percent to $1,280.70 per ounce.
U.S. President Donald Trump plans to nominate current Fed Governor Jerome Powell as the next chair of the Federal Reserve, a source familiar with the matter said on Wednesday.
"A lot of the focus is on the Fed chair, and Trump's expected nomination of Jerome Powell. However, the forward guidance on the Fed is somewhat uncertain because we don't know what exactly what Powell really means for the Fed into the next two years," said OCBC analyst Barnabas Gan.
"The current movement in prices is not really about him (Powell) being hawkish or dovish, but more so about market uncertainty about what his nomination would mean."
The dollar pulled back from a 3-1/2-month high versus the yen, sagging ahead of a U.S. tax bill that will be unveiled after a one-day delay.
"Right now, we see prices supported above $1,270 until perhaps a week from now. But beyond that, when the Fed meets in December, we expect one more rate hike," OCBC's Gan said.
"On that note, we are still bearish on gold and expect prices to touch $1,250 at year-end, underpinned by the rate hike."
The Fed kept interest rates unchanged on Wednesday and pointed to solid U.S. economic growth and a strengthening labour market while playing down the impact of recent hurricanes, a sign it is on track to lift borrowing costs again in December.
Gold is highly sensitive to rising U.S. interest rates, as these lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Spot gold may break a resistance at $1,283 per ounce, and rise into a range of $1,289 to $1,295, said Reuters technical analyst Wang Tao.
Meanwhile, silver prices rose 0.2 percent to $17.15 per ounce. Platinum fell 0.2 percent to $929.50 per ounce, while palladium was little changed at $1,001.30.