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Gold rose to a fresh two-and-a-half-week high on Wednesday after gaining nearly 2 percent in the previous session, as disappointing U.S. economic data reinforced expectations the U.S. Federal Reserve will keep rates on hold in September.

The market sentiment has certainly changed since Tuesday's poor economic data, MKS PAMP Group trader Alex Thorndike said. The U.S. dollar remains on the backfoot as the chances of a Fed rate hike in September have diminished even further, he added.

"The recent rally is impressive. But absence of a rate hike in September may largely be priced into gold. Also there has been some tightening of real yields," HSBC analyst James Steel said in a note.

Reference: Reuters