Gold prices rose on Thursday on a slight pullback in the U.S. dollar but investor caution surrounding the Federal Reserve's interest rate strategy and other economic cues that may influence it kept bullion hemmed in a relatively tight range.
Spot gold rose 0.3% to $1,945.69 per ounce by 7:26 a.m. (1126 GMT) after shedding 1% in the previous session. U.S. gold futures rose 0.1% to $1,959.90.
Offering some respite to gold, the dollar index eased 0.2%, but was still close to its highest in nearly three months.
Gold wasn't trading in any particular direction ahead of the Fed's meeting next week, said Bank of China International analyst Xiao Fu, adding that central bank buying of gold was bound to keep bullion supported.
Economists polled by Reuters see the Fed pausing interest rate hikes for the first time in more than a year at its meeting.
Other analysts have also said gold was likely to be rangebound ahead of the U.S. consumer inflation print on June 13 and the Fed meeting on June 13-14.
A weak CPI report could prompt a rebound in prices towards the $1,980 levels, said Michael Hewson, chief market analyst at CMC Markets.
The CME's Fedwatch tool, meanwhile, pegged chances of a pause next week at about 66%, and a 51% chance of a rate increase in July.
Another possible rate hike was also keeping gold range-bound at the moment, Fu said.
Higher interest rates dull the appeal for zero-yield bullion.
Also capping gold's upside, benchmark U.S. Treasury yields held close to a two-week high.
Silver gained 1% to $23.70 per ounce, platinum fell 0.4% to $1,014.04, while palladium was down 0.6% to $1,380.97.
(Reporting by Seher Dareen in Bengaluru; editing by Robert Birsel and Emelia Sithole-Matarise)