Gold rose 1 percent on Monday as the dollar edged lower on renewed weakness in oil and stock markets, with concerns over the global economic outlook raising questions about the U.S. Federal Reserve's pace of interest rate tightening.

The Federal Open Market Committee will meet Tuesday and Wednesday, and is widely expected to leave its federal funds rate unchanged at 0.25-0.50 percent.

Spot gold was up 0.6 percent at $1,104.95 an ounce at 2:34 p.m. EST (1934 GMT), after rising 1 percent to $1,108.50.

"There is a greater consensus that there is going to be a further decline in financial asset classes (equities) this year," said Ross Norman, CEO of bullion broker Sharps Pixley.

"But I don't think we are going to see Armageddon or a complete wipeout, more likely a correction in the markets."

U.S. gold for February delivery settled up 0.8 percent at $1,105.30 an ounce.

Traders awaited the Fed's statement on Wednesday after a two-day meeting as expectations for a March rate increase started to fade. Economists polled by Reuters now forecast three hikes in 2016 rather than the four initially floated by the Fed.

"The key question is whether the central bank will continue its rate hiking cycle in March or postpone it until June or later," said Fawad Razaqzada, technical analyst for Forex.com, adding that the probability of a hike in March is below 30 percent and around 50 percent in June.

The U.S. government will release its first reading on fourth-quarter economic growth on Friday. Economists polled by Reuters suggest U.S. GDP growth of 0.80 percent in October-December and annual expansion of 2.5 percent in 2016.

 

Hedge funds and money managers increased their bullish bets in COMEX gold and silver in the week to Jan. 19, data showed late Friday.

Spot platinum rallied 4 percent to $862.90 per ounce, a two-week high, in sharp contrast to last week's seven-year low.

Impala Platinum (Implats), the world's No. 2 producer of the precious metal, said it was too early to assess the production impact of a weekend fire in South Africa.

"The fire generated some buying and then it went through the $850 level and generated more buying," said Giovanni Staunovo, commodities analyst at UBS Wealth Management in Zurich, adding that it looked like short-covering.

Spot silver rose 1.5 percent to $14.22 an ounce and palladium turned down 0.7 percent to $490.40.