Spot gold was up 1.4% at $1,792.41 per ounce by 12:13 p.m. EDT (1613 GMT), after hitting its highest since April 22 at $1,797.75. U.S. gold futures advanced 1.4% to $1,792.90.
"A combination of bond yields remaining tame, the dollar under pressure, the amount of fiscal and monetary stimulus in this market ... all of those factors continue to drive gold and silver prices higher," said David Meger, director of metals trading at High Ridge Futures.
The dollar index slipped 0.3%, making gold cheaper, while benchmark U.S. 10-year Treasury yields also retreated, reducing the opportunity cost of holding non-interest bearing gold.
Gold also found support from data showing U.S. manufacturing activity grew at a slower pace in April.
Investors now await Friday's labour market numbers to gauge U.S. economic health.
But strong economic data can also push gold higher as it means inflation will rise, said Michael Matousek, head trader at U.S. Global Investors.
"We need to see gold get above the $1,800 level and sustain it for a little bit, and then it could be off to the races for $2,000."
Gold is considered a hedge against inflation.
Elsewhere, auto catalyst metal palladium rose 0.9% to $2,961.81 per ounce, after hitting an all-time high of $3,007.73 on Friday.
While output cuts by the automobile sector necessitated by a shortage of semiconductor components could reduce palladium demand this year, the impact would be relatively small compared with production losses from Russia's Nornickel, with a sizeable market deficit still expected, Heraeus Precious Metals said in a note.
Silver rose 3.7% to $26.86 per ounce, after hitting $26.95, its highest mark since March 1. Platinum rose 2% to $1,222.53.
(Reporting by Sumita Layek in Bengaluru; additional reporting by Nallur Sethuraman and Arpan Varghese; editing by Amy Caren Daniel, Pravin Char and Jonathan Oatis)
By Sumita Layek