Spot gold was up 0.6 per cent at $1,257.1 an ounce at 0903 GMT after earlier touching $1,258.00, its highest since June 14. U.S. gold futures rose 0.7 per cent to $1,257.8.
However, gold is little changed from last week.
"The broad story is the tug of war between the Fed, which seems determined to push on with monetary tightening and reducing its balance sheet and political uncertainty," said Danske Bank analyst Jens Pederson.
Allegations of ties to Russia have cast a shadow over U.S. President Donald Trump's first five months in office, North Korea testing a rocket engine and Brexit negotiations are all fuelling concern about global stability.
"Political noise out of Washington regarding Trump's ties with Russia is unlikely to provide lasting support to gold while an escalation of the geopolitical tensions with North Korea is a bullish wild card," Julius Baer analysts said in a note.
"Facing higher interest rates and a stronger dollar, we still see gold prices weakening towards $1,200 per ounce over the coming months."
Gold is often used by investors as a hedge against political and financial uncertainty. But it doesn't earn interest, dividends or coupons and it costs money to insure and store.
A rising U.S. currency makes dollar-denominated metals more expensive for holders of other currencies, which potentially could subdue demand.
The Fed's rate rise on June 14 saw investors sell gold. Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust, have fallen to 27.456 million ounces from 27.875 million ounces on June 13.
On the technical side, the first upside barrier comes in around $1,260 near the 55-day moving average. That is followed by the 21-day moving average at around $1,264, while the 100-day moving average at $1,249 provides strong support.
Elsewhere, silver gained 1.4 per cent to $16.75 an ounce, platinum climbed 1.2 per cent to $931.9 an ounce and palladium rose 0.8 per cent to $891.25.