Gold rose nearly 2 percent to settle at $1,391 per ounce on Thursday as the dollar remained under pressure after falling U.S. weekly jobless claims and as a senior Federal Reserve official said the central bank is in no hurry to start winding down its economic stimulus.
The president of the Federal Reserve Bank of St. Louis James Bullard said he did not think the Fed was "that close" to starting the process of winding down its support after Wednesday's comments by chairman Ben Bernanke hinted at it.
Spot gold was last up 1.6 percent to about $1,390 an ounce, having lost more than one percent on Wednesday after Fed Chairman Ben Bernanke said a decision to reduce the central bank's bond-buying program could be taken in the 'next few meetings.
U.S. gold futures ended the day $24.40 higher at $1,391.80 an ounce.
"The market is still digesting Bernanke's comments, which took everybody by surprise ... but today Bullard went a little bit in the other direction saying that tightening wouldn't come that quickly and I think that is lending support," Danske Bank analyst Christin Tuxen said.
The dollar index last fell 0.7 percent against a basket of currencies, mostly due to a two-week high in the yen and ignoring data showing the number of Americans filing new claims for unemployment benefits fell more than expected last week
Any sign of improvement in the U.S. jobs sector will likely be closely watched as this may spur speculation that the Fed may scale back its stimulus in September, analysts said.