By Apeksha Nair
(Reuters) - Gold prices rose on Wednesday after marking a 7-week low in the previous session, buoyed as the dollar pulled back from a 1-1/2-month high against a basket of currencies.
Spot gold had risen 0.3 percent to $1,275.91 an ounce by 0648 GMT. It touched its lowest since mid-August at $1,267.76 on Tuesday.
U.S. gold futures for December delivery also rose 0.3 percent, to $1,278.60 per ounce.
"Asian trade on Wednesday saw a modest recovery to bullion on the back of dollar weakness," MKS PAMP trader Sam Laughlin said in a note.
"The yellow metal looks to be settling in for a period of consolidation around current levels as interest out of Asia remains muted due to the Chinese holiday period."
The dollar on Wednesday shed gains versus the yen and against a basket of major currencies over speculation that U.S. President Donald Trump's choice for the next Federal Reserve Chair may be a less hawkish candidate than previously thought.
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"Trump has released the list of new Fed chair candidates and given that Yellen is on the list, it has given some hopes for gold traders that after all the Fed's monetary policy stance may not change if Yellen becomes the chairperson again," said Naeem Aslam, chief market analyst at Think Markets.
Meanwhile, world stocks continued to notch up gains, with Japan's Nikkei climbing to an over 2-year peak, tracking a Wall Street rally, as U.S. auto sales grew in September and optimism over global economic growth picked up.
A weaker dollar makes bullion cheaper for holders of other currencies, while stronger equities imply increased appetite for risk among investors.
"Volatility should pick up in North America as we head into a data-heavy end of the week," said Jeffrey Halley, senior market analyst at OANDA.
Spot gold may break resistance at $1,279 and rise into a zone of $1,287-$1,297 per ounce, said Reuters technicals analyst Wang Tao.
Among other precious metals, silver climbed 1 percent to $16.76 an ounce.
Platinum was about 1-percent higher at $915.50 an ounce, while palladium climbed 0.7 percent to $921.30 an ounce. The sister metals, widely used as autocatalysts, hit price parity for the first time in 16 years last week.
(Reporting by Apeksha Nair and Arpan Varghese in Bengaluru; Editing by Sonali Paul and Joseph Radford)