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Gold prices recovered from a 1.6% drop in the previous session to approach the key psychological level of $1,800 on Wednesday as the dollar rally paused.

Spot gold rose 0.2% to $1,797.56 per ounce by 0434 GMT, while U.S. gold futures were little changed at $1,799.40.

Prices marked their biggest one-day percentage decline in nearly a month on Tuesday following a rise in the dollar and benchmark 10-year Treasury note. [USD/] [US/]

The dollar index was flat on the day, while yields edged lower in Asian hours.

"In the shorter term, gold remains data dependent and what that U.S. data says about the tapering timeline," said IG Market analyst Kyle Rodda.

"So if the can keeps getting kicked down the road that gives gold an opportunity to rise again and retest that $1,830 level... But there doesn't seem to be high level of conviction to push the prices higher from here."

Rising COVID-19 cases driven by the Delta variant slammed a recovery in U.S. job growth in August, while it continues to threaten global economic recovery. [MKTS/GLOB]

This has triggered expectations that the U.S. Federal Reserve is likely to maintain its accommodative monetary policy for longer.

"Macroeconomic backdrop suggests that tapering or interest rate hikes may not happen aggressively. I think that in itself is sort of supportive for gold," said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

U.S. President Joe Biden will present on Thursday a six-pronged strategy intended to fight the spread of the Delta variant and increase vaccinations.

Investors were also focused on the European Central Bank's meeting on Thursday.

Silver was flat at $24.30 per ounce, platinum and palladium were up 0.2% at $1,000.52 and $2,376.76, respectively.

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V and Devika Syamnath)