Spot gold was up 0.2 percent at $1,295.83 per ounce as of 0730 GMT, hovering near Friday's peak of $1,298.42 - a level last seen in mid-June. US gold futures gained 0.4 percent to $1,297.20 per ounce. Minutes from the Fed's Dec. 18-19 policy meeting showed that several policymakers said they could be patient about future interest rate hikes.
"Gold is getting a bit of support out of a dovish Fed and institutional instability in the US We have got the markets pricing in the possibility of a Fed rate cut than a hike in the year ahead," said Kyle Rodda, a market analyst at IG, Australia.
"That resulted in lower (Treasury) yield, especially after the Fed minutes, which gave the US dollar a bit of a kick down. There is a chance of prices breaking the resistance at $1,300 with the present sentiment."
Gold is expected to retest a resistance at $1,299 per ounce, with a good chance of breaking above that and rising further to $1,311, according to Reuters technical analyst Wang Tao.
"With the government shutdown still far from resolved and Chinese trade talks just partly concluded, we are not sure that the turbulence in the equity markets is over just yet," INTL FCStone analyst Edward Meir said in a note, adding "the length in gold should be maintained." Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.3 percent on Wednesday to their highest since late July.