Spot gold rose 0.1% to $1,806.39 per ounce by 12:21 p.m. EDT (1621 GMT). U.S. gold futures gained 0.2% to $1,808.90.

On Monday, bullion jumped 1.4% as the dollar retreated and investors grew concerned rising cases of the Delta variant could prompt the Fed to delay a winding down of economic support. Also, data showed U.S. business activity growth slowed in August, while Asia's robust economic recovery from last year lost steam.

"The tenure of the marketplace has pivoted from thinking the Fed would lean hawkish at Jackson Hole symposium to one of the coronavirus keeping the Fed from doing anything as soon as they might have wanted to, and maybe even this year," said Jim Wyckoff, senior analyst at Kitco Metals.

Gold is considered as a hedge against inflation, while rising interest rates boost the opportunity cost of holding non-yielding gold.

"What might be gold-market sensitive is the Fed might start to say inflation isn't as transitory as thought and that could prompt them to tighten policy down the road, though the impact of the virus should override inflationary concerns for now."

Gold's latest uptick came despite outflows from exchange-traded funds. [GOL/ETF]

"Even though short-term hiccups to economic activity are a risk to watch, a renewed recession, bringing lasting support to gold, still seems very unlikely," said Carsten Menke, Head Next Generation Research, Julius Baer in note.

Silver rose 0.7% to $23.83 per ounce, while platinum fell 0.4% to $1,009.44.

Palladium was up 2.5% at $2,459.13. Prices climbed 5.5% on Monday.

(Reporting by Nakul Iyer in Bengaluru; Editing by Mike Harrison and David Gregorio)

By Nakul Iyer