Gold rose on Thursday after a softer-than-expected US inflation report tempered expectations for a Federal Reserve rate hike this month, with markets looking to upcoming jobs data for further policy signals.
Spot gold gained 0.8% to $4,187.43 per ounce by 0625 GMT, starting the month on a positive note after a more than 6% fall in September. US gold futures for December delivery firmed 0.7% to $4,217.50.
Data on Wednesday showed US inflation rose less than expected in August, while price pressures were revised lower for the prior month.
The data reduced expectations of a rate hike in October, with markets pricing in a 36% chance, down from 45% before the release. Traders, however, still see an 89% probability of an increase in December.
Higher interest rates reduce the appeal of gold, which does not pay interest.
"Incoming data is going to be important... to see how the market deals with it and shapes rate-hike expectations," said Ilya Spivak, head of global macro at Tastylive.
"We are in a situation where the market is dealing with a lot of conflicting forces."
The crucial US nonfarm payrolls report for September is scheduled for release on Friday.
Limiting gains for gold, the US dollar drifted higher. A stronger greenback makes dollar-priced metals costlier for holders of other currencies.
All of gold's "September losses are unlikely to be recovered, but there are reasons to believe that the worst of the correction is over for now and that there is a case for higher prices," said Bart Melek, global head of commodity strategy at TD Securities.
On the geopolitical front, Iran said on Wednesday it had received a US response to its latest proposal to resurrect the collapsed ceasefire in the Gulf, days after US President Donald Trump said he had rejected it.
Spot silver rose 1.4% to $61.23, platinum climbed 1.2% to $1,727.18 and palladium gained 0.6% to $1,210.75. - Reuters
