Spot gold was up 0.4% to $1,736.06 an ounce by 1245 GMT after hitting its highest level since March 25 at $1,738.65. U.S. gold futures gained 0.5% to $1,737.
"A softer dollar is the main reason for the bid coming into gold ... and also the yields, which during the past week have not done a great deal," Saxo Bank analyst Ole Hansen said.
The dollar fell 0.4% against a basket of rivals, making gold more affordable for holders of other currencies, while benchmark U.S. Treasury yields were lower.
However, risk sentiment in wider financial markets remained upbeat, with global equities at record highs on strong economic data from China and the United States, reducing some demand for safe-havens assets such as gold.
"For the gold story to return to a firmer footing ... we need to see either some geopolitical concerns or inflation pick up more aggressively than the market has been pricing," Hansen said.
Investors are also awaiting minutes on Wednesday from the Federal Reserve's last meeting for further clues on monetary policy outlook.
Cleveland Fed Bank President Loretta Mester on Monday said the U.S. economic outlook is brightening, though the U.S. central bank should stick to its easy policy to support growth further.
"The environment is not very robust for gold. The constant rise in yields and a stable dollar on the back of continued strong data from the United States have sort of sparked a feeling of central banks becoming hawkish much before the expected time," IG Market analyst Kyle Rodda said.
In other precious metals, silver rose 0.5% to $25.02 an ounce, palladium added 0.8% to $2,686.22 and platinum gained 0.6% to $1,215.99.
(Reporting by Sumita Layek in Bengaluru; Editing by David Goodman and Paul Simao)
By Sumita Layek
