Gold rose on Wednesday, buoyed by a weaker dollar and hopes of a prolonged period of easy central bank money in the United States as the metal headed for its biggest monthly gain since January 2012.
Markets were waiting for a Federal Reserve policy statement at 1800 GMT for clues on when the U.S. central bank will start to taper its $85 billion monthly bond purchases.
Spot gold was up 0.5 percent at $1,332.86 an ounce by 0941 GMT, having reached a five-week high of $1,347.69 last week. U.S. gold futures for August gained $7.80 to $1,331.80 an ounce.
"Any mention of September as the timing for the central bank's tapering of QE3 would be dollar-positive and could still sink gold back below $1,300," VTB Capital analyst Andrey Kryuchenkov said.
"Prices could however remain volatile ahead of the U.S. labour data on Thursday and Friday." The dollar came under pressure against a basket of currencies as investors steered clear of big bets ahead of a series of U.S. labour data and the Fed statement.
Bullion has risen 8 percent in July, also helped by technical buying triggered after prices broke through the tight trading ranges of the last two sessions above $1,330, traders said.
The July gain was prompted by remarks from Fed Chairman Ben Bernanke that highly accommodative monetary policy would be needed for the foreseeable future and that any reduction in bond purchases depended on the strength of the economy.
U.S. GDP data for the second quarter will also be released on Wednesday, but investors were mostly waiting for the influential U.S. nonfarm p yrolls report for July due on Friday.
"On the basis that the Fed will know the U.S. second-quarter GDP figure, it may have some influence on tonight's statement," Marex said in a note.
The European Central Bank and the Bank of England also hold policy reviews on Thursday.
Gold premiums in Shanghai have eased from last week, indicating a slowdown in demand. Shanghai gold was about $16 more than London spot prices, down from more than $25 last week.
Gold imports by India have halted since July 22, when the central bank announced new rules tying imports to exports, sending premiums for scarce stocks soaring. Traders were quoting a premium of up to $45 an ounce over London spot prices.
Premiums in other parts of Asia were mostly stable, as dealers navigate a seasonally quiet period without any acute shortage of the metal.