U.S. dollar weakness helped boost gold prices on Thursday, but gains were limited as the market awaited clues from next week's meeting of the Federal Reserve on the pace of U.S. interest rate rises.
Spot gold rose 0.1 percent to $1,297.20 an ounce by 2:17 p.m. ET, earlier hitting a one-week high, $1,303.08. U.S. gold futures for August delivery settled up $1.60 at $1,303.
"The rise in prices is due to the dollar," said Capital Economics analyst Simona Gambarini.
A weaker dollar is good for gold because it makes the metal cheaper for buyers using other currencies and can fuel demand.
However, Gambarini said investors were in wait-and-see mode ahead of the Fed meeting on June 12-13, when they expect both a rate rise and signals on the outlook for U.S. monetary policy.
Higher U.S. interest rates tend to boost the dollar and also push up bond yields, reducing the appeal of non-yielding bullion.
"Gold steady and better again with more short covering as we await six days to the next Fed meeting," said George Gero, managing director of RBC Wealth Management. "Notes and probable rate hikes all priced in."
Expectations that the Fed will hike interest rates several times this year were fueled by U.S. data showing an unexpected fall in applications for unemployment benefits.
Investors were anticipating a summit between the leaders of the United States and North Korea on June 12 and a European Central Bank (ECB) meeting on June 14. Both events could affect gold. Tensions surrounding North Korea have supported gold, increasing demand for an asset viewed as a safe place to invest in times of geopolitical uncertainty.
Markets are meanwhile betting the ECB will signal a winding down of its vast bond-buying program, boosting the euro.
On technicals, Commerzbank analysts said gold prices were more likely to fall than to rise if it was unable to move above its 200-day moving average around $1,308. Fibonacci technical support was at $1,286, said analysts at ScotiaMocatta.
Meanwhile, silver gained 0.23 percent at $16.68 after rising to its highest since April 23, $16.90. Silver broke above its 100-day moving average on Wednesday and its 200-day moving average on Thursday, improving its technical outlook and triggering buying. Commerzbank said the moves higher suggest a recovery towards $17.50-$17.74.
Platinum lost 0.4 percent at $898.90, while palladium dropped 0.57 percent at $1,010.50, earlier reaching $1,029, its highest since April 23.