Traders reported subdued activity because of the Lunar New Year holiday in many Asian countries and some nervousness before the Federal Reserve’s two-day meeting on monetary policy starting on Tuesday.
Spot gold was up 0.1 percent at $1,192.55 an ounce at 1425 GMT. That compared with Friday’s 2-1/2-week low of $1,180.65. U.S. gold futures gained 0.1 percent to $1,189.8.
“Gold’s future direction will depend on the dollar, U.S. monetary policy and long-term interest rates,” said Commerzbank analyst Carsten Fritsch,
“The immigration ban added to risk-off sentiment and boosted gold earlier … There is also political risk coming up in the form of elections in France and the Netherlands.”
Trump’s administration tempered a key element of his immigration ban, but the move reinforced growing worries about investing in the United States, analysts said.
The Fed raised interest rates in December and at that time signaled as many as three rises in 2017 as the Trump administration takes over with promises to boost growth through tax cuts, spending and deregulation.
Higher rates could mean a higher U.S. currency, which makes dollar-denominated gold more expensive for holders of other currencies, potentially dampening demand.
“We maintain a cautious view on gold, taking into consideration the expectation of an improving growth outlook, rising interest rates and a strengthening dollar,” Julius Baer analysts said in a note.