Gold extended earlier gains on Wednesday as the dollar weakened after US Federal Reserve officials allayed concerns the bank would soon reduce its bond-buying programme, while Chinese physical demand lent support to prices.
On Tuesday, New York Federal Reserve Bank President William Dudley and St. Louis Fed chief James Bullard said further economic progress was needed before they would support curtailing bond purchases.
Spot gold reversed Tuesday's 1.3 percent fall and rose as much as 1.6 percent to a session high of $1,397.51 an ounce. It was up 1.4 percent at $1,395.11 at 1200 GMT.
Traders said the metal was likely to find strong technical resistance at the $1,400 level but that a break through that level could see prices rise to around $1,425, where the next resistance level is pegged.
US gold futures for June delivery were up 1.2 percent at $1,393.50 an ounce.
Spot gold fell for eight sessions out of the past nine and touched $1,338.95 on Monday, its weakest since April 16.
The dollar was down against the euro and a basket of currencies ahead of Fed Chairman Ben Bernanke's testimony to Congress at 1400 GMT on the state of the US economy, which should give clues on his monetary easing stance.
The Federal Open Market Committee also releases the minutes of its April 30-May 1 meeting later in the day.
"The correlation of the dollar with gold has been quite strong lately, and today's weakness in the US currency after Fed officials said it may be too early to be pulling back of QE (quantitative easing) certainly helps the metal," Societe Generale analyst Robin Bhar said.
"We are getting corrective bounces, but we are still in a downtrend, and these bounces are not strong enough to reverse that as investors continue to divest and physical demand is not as strong as it was one month ago."
Strong demand from China, the world's second-biggest gold consumer after India, also provided some support to the metal.
Shanghai gold prices fell slightly on Wednesday but were still around $30 higher than spot gold, indicating that Chinese demand was strong because it would be cheaper for local buyers to purchase gold from overseas.
But buying in India, the world's top gold consumer, has been slowing as its central bank tries to rein in a trade deficit by cutting gold and silver imports.
As a gauge of investor interest, holdings of New York's SPDR Gold Trust, the largest gold-backed exchange-traded-fund, fell 0.8 percent on Tuesday to 1,023.08 tonnes, the lowest in more than four years.
Spot silver gained 1.9 percent to $22.80 an ounce, regaining more ground after dropping to 2-1/2-year lows earlier in the week.
Platinum rose 1 percent to $1,470.99 an ounce as supply concerns in South Africa continued and palladium rose 0.5 percent to $746.97 an ounce.