Gold eased slightly on Wednesday as risk sentiment recovered and the dollar held firm, but expectations of dovish monetary policy from global central banks capped bullion's losses and kept prices above the $1,550 an ounce level.
Spot gold was down 0.2% at $1,555.16 an ounce by 10:46 a.m. EST (1546 GMT). US gold futures fell 0.2% to $1,555.20.
"Investors are actually selling excess positions, and that is keeping the prices capped," said Daniel Ghali, commodity strategist at TD Securities.
"On the other hand, we're also seeing a steady flow of interest in (gold), and markets are currently building as capital looks to shelter itself from negative real rates across the globe."
Investors will keep a close eye on the European Central Bank's first policy meeting of the year on Thursday, while the US Federal Reserve's first meeting is scheduled for Jan. 28-29.
Both banks are expected to be dovish.
In 2020, "precious metals remain a story linked to easy monetary policy globally and broad US dollar weakness," UBS analysts said in a note.
Elsewhere, palladium gained 2.3% to $2,457.36 an ounce, having slid by about 4% in the previous session.
A structural change in demand after tighter emission rules in some countries will boost palladium demand, said Ghali.
Palladium touched a record high of $2,582.19 on Monday.
Silver rose 0.4% to $17.84, and platinum was up 1% at $1,008.86.