Gold prices slipped from a two-month high on Thursday as the American dollar and bond yields ticked higher, although hopes for a pause in rate hikes by the U.S. Federal Reserve after July meeting limited the decline.
Spot gold was down 0.4% at $1,968.8477 U.S. per ounce by 4:09 p.m. EDT, after hitting its highest since May 17 earlier in the session.
U.S. gold futures fell 0.4% to $1,972.
The dollar gained 0.6% against its rivals after the U.S. jobless claims data, making gold more expensive for other currency holders. Benchmark 10-year U.S. Treasury yields rose to 3.850%.
Data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, touching the lowest level in two months amid ongoing labor market tightness.
Investor focus now shifts to the U.S. central bank policy meeting next week, with markets pricing in a 25-basis-point rate hike from the Fed.
Most economists polled by Reuters expect that a hike at July meeting would be the last increase of the current tightening cycle from the Fed.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.
Spot silver dropped 1.7% to $24.7237 U.S., having hit its highest since mid-May. Platinum fell 1.8% to $955.3522 U.S., while palladium slipped 2.4% to $1,276.32 U.S. .