"Initial jobless claims were a good sign," Natixis analyst Bernard Dahdah said. "The chance of a rate hike happening in September is still relatively low, at 32 percent, but that's an improvement, compared to where it was.
"If they do raise rates in September, that could have a big effect on gold, in the sense that the market would be taken by surprise."
Gold is highly sensitive to rising U.S. rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. "Now what we're seeing is a bit of a wait-and-see mode, where markets are just monitoring the situation and waiting for further comments that might move the market," Capital Economics analyst Simona Gambarini said.
Silver fell for the fourth straight session, dropping 0.3 percent to $18.57 an ounce and hitting an eight-week low. Platinum fell 0.13 percent to a one-month low at $1,073.40 an ounce. Palladium was up 0.73 percent at $687.