Traditional metals fell about 0.48% during Thursday's trading session and failed to hold above $3,300 after moving higher since the opening of the week.
This was due to pressure from the strengthening US dollar even though US Treasury yields retreated from daily highs after the House of Representatives approved Donald Trump's budget.
At 9.50 am, gold prices were at $3,303.26, up 0.25% since they opened early Friday in Asian trading.
Market sentiment improved slightly as the focus shifted to the downgrade of US government debt and the fiscal package approved by the US House of Representatives of around $4 trillion.
The US Dollar Index (DXY), which tracks the value of the dollar against a basket of six currencies, had recorded several previous weekly losses and was up a modest 0.18% at 99.86, a barrier for the precious metal to dominate the market.
However, the outlook for bullion prices remained optimistic due to geopolitical conflicts. Newswires revealed that Israel is preparing to attack Iranian nuclear facilities if talks between Iran and the US fail.
On the data front, the S&P Global Purchasing Managers' Index (PMI) in the US improved, a sign that the economy remains strong.
Earlier, the US Labor Department revealed that the number of Americans filing for unemployment benefits fell short of previous readings and forecasts.
For now, investors will be eyeing the release of US housing data and speeches from Fed officials on Friday.
