Gold stayed near a three-month top on Thursday after marking its best day in two weeks, buoyed by expectations that global economic and financial headwinds could make it tough for the US Federal Reserve to raise interest rates in the near term.
Uncertainty around the timing of the next US rate hike has burnished gold's safe-haven draw that has been on full display since the year began as investors shunned risky assets.
Spot gold was little changed at $1,142.32 an ounce by 0625 GMT, after rising as high as $1,145.60 on Wednesday, its loftiest since October 30.
Gold rallied 1.2 per cent overnight, the biggest daily gain since January 20. It has risen nearly 8 per cent so far this year.
William Dudley, president of the Federal Reserve Bank of New York, said financial conditions have tightened considerably and the weakening global outlook could have "significant consequences" to the US economy.
Those comments dragged down the dollar overnight, adding to market expectations that the Fed was unlikely to raise rates again in March. US rates rose for the first time in nearly a decade in December.
BMI Research, part of ratings agency Fitch, said gold is now increasingly likely to move between $1,000 and $1,200 instead of pushing below $1,000 this year as it had previously thought.
"The Federal Reserve will keep monetary policy looser than previously anticipated in the months ahead as global economic headwinds prompt officials to postpone their hiking plans until the second half of 2016," BMI told clients in a note.
Also cooling US rate hike views, activity in the US services sector slowed to a near two-year low in January.
US gold for April delivery was up 0.2 per cent at $1,143.30 an ounce.
Holdings of top gold-backed exchange-traded fund, SPDR Gold Trust, continued to rise, standing at 22.19 million ounces on Wednesday, the most since late October.
Investor focus will soon turn to Friday's nonfarm payrolls and INTL FCStone analyst Edward Meir said a weak outcome could sustain the dollar selloff.
"If we get a stronger-than-expected reading, the pendulum might swing the other way, as the Fed 'hawks' recover lost ground in the debate," said Meir.
Economists polled by Reuters are looking for US non-farm payrolls to increase by 190,000 in January, after rising by 292,000 in December.
Other precious metals kept pace with gold's gains. Spot silver was steady at $14.66 an ounce, not far below Wednesday's three-month peak of $14.80.
Spot platinum climbed nearly 1 percent to a one-month high of $887 an ounce and palladium rose 0.2 percent to $510.30 an ounce, near Wednesday's one-month top of $515.54.