Gold ended the trading session above $1,315 an ounce Thursday on heightened geopolitical tensions and news of more U.S. sanctions against Russia, while palladium rose more than 1 percent on renewed supply worries.
Safe-haven bids boosted bullion after a Ukrainian fighter plane was shot down over eastern Ukraine as government forces were fighting to quell a pro-Russian separatist rebellion. Russia's U.N. ambassador later said Russia "did not do it."
"These events are very fast moving. If it I doesn't escalate further, we could conceivably see prices fall back down. It's been pretty much thin in the market, given the summer conditions. A lot of technical movements,"said Howard Wen, precious metals analyst at HSBC.
"It's been a tight range and it broke to the upside given the geopolitical event," he said, noting volume was average.
U.S. gold futures for August delivery closed $17.10 higher at $1,316.90 an ounce, up 1.3 percent on the day.
Spot gold was last up 1.3 percent at $1,316 an ounce, having dropped more than 3 percent over the first two days of this week to their lowest since mid-June, at $1,291.70.