Gold prices edged up on Thursday, as investors awaited developments in the drawn-out debt ceiling negotiations in Washington, with gains in bullion capped by the US dollar rising to an over two-month high.
Spot gold rose 0.2% to $1 961.55 per ounce by 09:47 GMT. US gold futures were steady at $1 964.10.
With uncertainties around an 11th-hour debt ceiling deal between Democratic President Joe Biden and top congressional Republican Kevin McCarthy, gold is seeing safe-haven flows, said Peter Fertig, an analyst with Quantitative Commodity Research.
While "productive talks" were held on Wednesday to seek a deal to raise the United States' $31.4 trillion debt ceiling, there is little time left before the early June default deadline.
Gold ended lower on Wednesday as minutes from the May Fed meeting showed that policymakers "generally agreed" last month that the need for more interest rate increases "had become less certain."
Markets were pricing in a 65.8% chance of rates being held steady next month, and a 34.2% chance of a 25-basis points hike, the CME FedWatch tool showed.
Gold, a non-yielding asset, tends to lose appeal in a high interest rate environment.
Fed Governor Christopher Waller said the path ahead would depend on economic data "over the next three weeks."
US GDP estimates and initial jobless claims are due at 1230 GMT for guidance on the economy's health.
Rival safe-haven dollar .DXY scaled its highest since mid-March, making gold less attractive for overseas buyers, while benchmark Treasury yields were near highs seen in March 13.
"Gold does not seem to be too concerned about the debt ceiling directly and is really viewing things through the lens of the dollar," said independent analyst Ross Norman.
"The path of least resistance is currently lower."
Spot silver was little changed at $23.09 per ounce, platinum rose 0.7% to $1 031.11 while palladium was down 0.7% to $1,405.61.