The dollar was down against a basket of major currencies. Weak earnings dragged stocks lower.
"We're seeing a mild consolidation rally," said Bill O'Neill, co-founder of commodities investment firm LOGIC Advisors in New Jersey.
"The dollar has lost a little ground and we have nervousness surrounding equities."
Investors have abandoned bullion during a broad commodities sell-off and on expectations that the Fed may raise interest rates as early as next month.
The looming rise in U.S. rates dims the appeal of non-interest yielding gold, instead pulling more funds towards the dollar.
Data on Thursday showed the number of Americans filing new applications for unemployment benefits rose less than expected last week.
Read MoreGold under pressure after US data, rate rise in focus
Expectations that the Fed could increase rates at its next policy meeting in September gained ground this week after Atlanta Federal Reserve President Dennis Lockhart said only a "significant deterioration" in the U.S. economy would make him not support a rate rise next month.
But Fed Governor Jerome Powell said policymakers had not yet decided whether to raise rates next month, adding that more recent employment data had been mixed.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 21.47 million ounces on Wednesday, the lowest since September 2008.
"In the medium term, with rising bond yields, EM (emerging markets) currencies collapsing, no safe haven demand and with the dollar potentially going higher on U.S. rate expectations, there is no gold-friendly news out there," Saxo Bank senior manager Ole Hansen said.