Gold kicked off April by climbing on Wednesday as the dollar retreated, but expectations the Federal Reserve is on course to lift interest rates this year capped gains.

Investors are looking to U.S. jobs data due on Friday, when another strong number could boost bets the U.S. central bank will hike interest rates sooner rather than later.

Economists polled by Reuters have forecast a 244,000 rise in non-farm payrolls in March, which would mark the 13th straight month of job gains of over 200,000, matching a run in 1994-95.

The Fed will have a "strong" case to hike interest rates in June, Richmond Fed President Jeffrey Lacker said, dismissing recent weak U.S. economic data as transitory and perhaps due to unseasonable weather.

Spot gold was up 0.2 percent at $1,185.65 an ounce by 0632 GMT, after ending March with a loss of 2.4 percent.

Bullion has dropped nearly 3 percent since touching a three-week high last week, as the dollar gained momentum after Fed Chair Janet Yellen's comments on Friday suggested a rate hike is still on the cards for later this year.

Yellen's remarks halted a seven-day rally in gold, its longest since 2012, that had been spurred by hopes the Fed would take it slow in raising rates.

The greenback slipped against a basket of major currencies on Wednesday, making dollar-denominated assets such as gold cheaper for holders of other currencies.

U.S. gold for April delivery rose 0.2 percent to $1,185.50 an ounce.

The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Trust, in March recorded its biggest monthly outflow since December 2013.

Investors were also keeping an eye on talks between Iran and six world powers to settle a dispute over Tehran's nuclear program as discussions extended beyond a Tuesday deadline.

A deal could see the dollar "sell off slightly thus giving gold a bit of a lift," INTL FCStone analyst Edward Meir said in a note. (Reuters)

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