Gold extended its rebound after Federal Reserve Chairman Kevin Warsh's speech dampened speculation of a rate hike this year.

Bullion climbed as much as 2.5% as the dollar and bond yields pared gains. Warsh repeated his determination to bring inflation back to the 2% target.

Gold traders were fearing a more hawkish stance, said Bart Melek, global head of commodity strategy at TD Securities. Spot gold traded 2.4% higher to about $4,103.98 an ounce.

The metal's gain is a direct result of Warsh's remarks, which eased concerns of higher borrowing costs, a headwind for non-yielding metals like gold.