Bullion climbed to a one-week high as the dollar fell against the euro and the yen, with the Japanese currency recovering from a four-year low set against the greenback earlier in the session.
Gold had largely failed to rally after the Bank of Japan pledged last Thursday to inject about $1.4 trillion into the economy over two years. The metal ended the week down 1 percent.
“Gold is now slowly sinking in to the news that Japan is printing a quick deal of money and liquidity is going to be abundant again,” said Axel Merk, chief investment officer of Merk Funds, which oversees $630 million in mutual fund assets.
Spot gold was up 0.9 percent at $1,587.21 an ounce by 12:25 pm EDT (1625 GMT).
US Comex gold futures for June delivery were up $14.60 at $1,587.10, with trading volume set to finish sharply below its 30-day average, preliminary Reuters data showed.
The metal also benefited after the US government said wholesale inventories recorded their biggest decline in nearly 1-1/2 years in February, prompting some economists to lower their lofty first-quarter economic growth estimates.
Earlier in the session, gold rose as data showed China’s annual consumer inflation cooled in March, which left policymakers room to keep monetary conditions easy.
Silver was up 2.6 percent at $27.97 an ounce. UBS and Deutsche Bank cut their 2013 gold price forecasts on Tuesday, with Deutsche lowering its price view by 12 percent to $1,637 an ounce, saying returns from the metal may be on course for their worst annual performance since 2000.
In the physical market, Hong Kong’s net gold flow to mainland China rebounded last month from three-month lows in January, reflecting increased demand ahead of the Lunar New Year holiday, data showed on Tuesday.
Traders will now closely monitor minutes from the Federal Reserve’s latest policy meeting, set to be released on Wednesday, for clues on US monetary policy, particularly any changes to the central bank’s $85 billion monthly purchases of mortgage-backed bonds.
Among platinum group metals, platinum climbed 1 percent to $1,547.99 an ounce and palladium eased 28 cents to $729.72 an ounce.