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April 12 Gold jumped to a three-week peak on Tuesday on expectations the Federal Reserve would not raise U.S. interest rates soon and as the dollar traded close to its lowest in nearly eight months, though profit-taking chipped away at some recent gains.

"We expect profit-taking in gold at these levels with $1,250 to be supported," said MKS Group trader Jason Cerisola.

The dollar index has shed nearly 3 percent after recent dovish comments by Yellen.

RBC Capital Markets has upped its 2016 average gold forecast by 9% to $1,250 an ounce, describing the outlook as positive in the second half of the year due to a more dovish posture from the U.S. Federal Open Market Committee, declining real interest rates and improving physical demand.

“For the balance of 2016, we expect gold to trade in a broad $1,200/oz to $1,300/oz range with the gold price improving over the course of the year,” RBC said in a research report Sunday.

The bank upped its 2017 forecast by 8% to an average of $1,300. However, RBC left its average silver forecast at $15.50 for 2016 and $16.50 in 2017.

As of 11:04 a.m. EDT, Comex June gold was $15.30 higher to $1,259.10 an ounce, while May silver was up 48.6 cents to $15.87.

“We expect precious metal prices to remain volatile for the foreseeable future while the market assesses the outcome of the dovish FOMC posture,” the bank said. “RBC now forecasts a single rate hike in 2016, and we believe that this ‘low and slow’ path has been discounted into a $1,250 gold price. A dovish Fed outlook into 2017, growing inflation expectations or a financial market shock would lead to further upside for gold.”

Orbex said, “Gold prices have rallied back to the 1250 handle, but there is evidence that the current rally could be unsustainable. We anticipate that Gold prices could start turning lower over the next few days for an eventual correction back to the 1200 levels.”

Reference: KITCO, Reuters, FXStreet, MarketWatch