Spot gold was up 1% at $1,936.99 per ounce by 0314 GMT, a day after slipping below the $1,900 level in choppy trade. U.S. gold futures eased 0.1% to $1,947.60.
"The fall that took gold below $1,900 has flushed out a lot of weak longs and it looks like now we're going for a bit of consolidation and gold is preparing for another move higher," said Michael McCarthy, chief strategist at CMC Markets.
"The outlook remains positive in a lower interest rate environment, particularly with the weakening U.S. dollar. The settings are unchanged, we're seeing record amount of stimulus and have real fears about the risks to growth."
The dollar slipped 0.2% against rivals, making gold cheaper for holders of other currencies.
Gold, which pays no interest, also benefits from low interest rates as this reduces the opportunity cost of holding bullion.
Adding to worries over the economic toll from the pandemic, U.S. Federal Reserve policymakers warned U.S. economic growth would be muted until the virus was contained.
"Gold also continues to garner support from the pandemic as it continues to impact global economic growth and is dovish for central bank policy," Phillip Futures' analysts said in a note.
Massive money-printing by global central banks have helped gold rise about 28% so far in 2020 as the metal is considered a hedge against currency debasement and inflation.
Investors are now waiting for a breakthrough in stalled U.S. stimulus talks while keeping a close watch on frayed U.S.-China ties ahead of key trade talks scheduled on Aug. 15.
Elsewhere, silver rose 1.5% to $25.94 per ounce, platinum gained 1% to $940.58 and palladium climbed 1.6% to $2,165.44.
By Brijesh Patel
