Gold prices edged higher in European morning trade on Thursday, moving away from their lowest level in around five weeks as recent selling pressure tied to bets on another U.S. interest rate hike this year lost steam.
Comex gold futures were at $1,254.15 a troy ounce by 4:00 AM ET (0800 GMT), up $8.35, or around 0.7%.
Gold prices fell to their lowest since May 17 at $1,241.70 on Wednesday, before rebounding to end higher, snapping a two-session drop.
Also on the Comex, silver futures were up 20.8 cents, or roughly 1.3%, to $16.58 a troy ounce, after hitting its lowest since May 12 at $16.31 a day earlier.
Investors continued to evaluate the possibility of another rate hike from the Federal Reserve later this year in the wake of mixed messages from policymakers in recent days.
Last week, the U.S. central bank raised interest rates for the second time this year and maintained plans to go ahead with another rate hike by year-end.
Despite the Fed's relatively hawkish message, market players remained doubtful over the central bank's ability to raise rates as much as it would like in the coming months due to a recent run of disappointing U.S. economic data and indications of weak inflation.
Futures traders are pricing in less than a 15% chance of a hike at the Fed's September meeting, according to Investing.com's Fed Rate Monitor Tool. Odds of a December increase was seen at about 35%.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Among other precious metals, platinum ticked up 0.3% at $930.05, while palladium added 0.2% to $877.67 an ounce.