Spot gold advanced 0.4% to $1,925.90 per ounce by 0652 GMT. U.S. gold futures climbed 1% to $1,927.10.
Prices had declined as much as 2.5% after scaling a high since Nov. 9 on Wednesday, as 10-year U.S. Treasury yields jumped above 1% for the first time since March.
"We're just seeing a bit of a corrective move after gold bottomed out from the overall sell-off on Wednesday" as markets consider the economic and asset impact of further stimulus, said DailyFX currency strategist Ilya Spivak.
U.S. inflation expectations rose in anticipation of more stimulus after Democrats gained control of the Senate with victories in Georgia's two runoff elections.
Many investors view non-yielding bullion as a hedge against inflation and currency debasement that they fear could result from large stimulus measures.
Capping gold's advance, yields remained firm above 1% and helped dollar rebound from a multi-year low. A stronger dollar makes gold expensive for holders of other currencies.
Jeffrey Halley, a senior market analyst at OANDA, said, "U.S. yields would have to move quite a bit higher to derail the dollar bear market."
"The dollar is going to depreciate all through 2021, U.S. yields may move slightly higher from here, but they're not going to run away to the top, in that environment gold should flourish."
Concerns briefly rose after supporters of outgoing President Donald Trump stormed the U.S. Capitol in a bid to overturn his election defeat.
Minutes from the Federal Reserve's December meeting showed policymakers were nearly unanimous in their decision to leave its bond-buying programme unchanged.
Silver shed 0.1% to $27.27 an ounce. Platinum rose 0.2% to $1,104.13, while palladium climbed 0.7% to $2,454.50.
(Reporting by Sumita Layek in Bengaluru; Editing by Ramakrishnan M. and Subhranshu Sahu)
By Sumita Layek
