The metal broke above the key $1,300 psychological level in the last session after failing to do so multiple times. Gold's gains, however, were held in check by investors booking profits following the recent rally. The metal has jumped more than 12 percent from a trough in mid-August, boosted further by the recently ended US government shutdown, analysts said.
"The key factor to watch for gold is development surrounding the US Federal Reserve (monetary policy), but we expect it to be on hold through the first half of the year," said Suki Cooper, precious metals analyst at Standard Chartered Bank. Investors are bracing for a busy week with the culmination of high-level trade talks between the United States and China on Jan. 30-31.
Investors are also focusing on this week's Federal Open Market Committee meeting, where Chairman Jerome Powell is widely expected to acknowledge growing risks to the US economy as global momentum weakens. Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
Gold is hovering around the $1,300 resistance level, which may kindle some jitters among investors, Capital Economics analyst Ross Strachan said. Bullion is likely to break to $1,311 as it has cleared resistance at $1,299, Reuters analyst Wang Tao said. In other metals, palladium fell 2.2 percent to $1,330 per ounce. Prices hit a record high of $1,434.50 on Jan. 17. Silver shed 0.1 percent to $15.73 per ounce, while platinum slipped 0.6 percent to $808.50.