Gold (XAU/USD) rebounded nearly 1% on Thursday as the US dollar weakened.
The rise came despite US inflation data showing price pressures remain high, reinforcing expectations that the Federal Reserve (Fed) will keep interest rates at current levels for longer.
At 8.50am, gold was trading at 4,019, down 0.20% since it opened early Friday in Asian trading.
The Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation measure, rose to 3.4% year-on-year in May from 3.3% in April, in line with market expectations.
However, US Treasury yields fell as investors still expect at least one more interest rate hike before the end of the year.
Meanwhile, the US Dollar Index (DXY) fell 0.19% to 101.39 after hitting a yearly high of 101.80 on Wednesday. The dollar's decline supported gold prices as the precious metal became cheaper for holders of other currencies.
Economic data showed the US labor market remained strong as new claims for unemployment benefits fell to 215,000, lower than expectations of 225,000.
However, Durable Goods Orders fell 4.5% in May after recording an 8.5% growth in April, indicating that manufacturing activity is slowing.
In energy markets, oil prices began to decline from the highs reached during the US-Iran conflict. Sentiment improved after Washington and Tehran signed a peace deal that reopened trade routes through the Strait of Hormuz.
This week, market attention will turn to speeches from several Fed officials and the final reading of the University of Michigan Consumer Sentiment Index for June.
