Spot gold was up 0.1% at $1,735.90 per ounce by 11:35 a.m. ET (1635 GMT). Gold rose as much as 1.5% to $1,759.53 earlier in the session, staging a strong comeback from a fall of about 3% drop on Friday.
U.S. gold futures rose 0.4% to $1,735.80 per ounce.
"The combination of stimulus measures along with bond yields tapering back has allowed gold to bounce back," said David Meger, director of metals trading at High Ridge Futures.
But the dollar's bounce and economic recovery hopes "are sticking points" to this picture.
Gold also faced some pressure from gains on Wall Street, driven by optimism over the stimulus and promising updates on vaccines. [.N]
The U.S. House of Representatives approved President Joe Biden's $1.9 trillion coronavirus relief bill early on Saturday, sending it to the Senate for consideration.
Although gold may be supported by the stimulus in the medium term, "as the economy gains confidence and positive results come out of the vaccines, gold will face some headwinds," said StoneX analyst Rhona O'Connell.
While gold is considered a hedge against inflation, higher bond yields have of late threatened that status, since they translate into higher opportunity cost of holding bullion, which pays no return.
On the technical front, the psychological $1,700 level is very significant, while the $1,760-$1,765 range is an important hurdle for gold to rise further, said Stephen Innes, chief global market strategist at financial services firm Axi.
Silver gained 0.9% to $26.85 an ounce, while palladium climbed 2.4% to $2,373.10. Platinum rose 1.2% to $1,203.
(Reporting by Brijesh Patel and Arpan Varghese in Bengaluru; additional reporting by Diptendu Lahiri and Shreyansi Singh, editing by Emelia Sithole-Matarise and Jane Merriman)
By Brijesh Patel
