Gold prices edged higher on Wednesday, as worries over a surge in coronavirus' Delta variant cases offset pressure from a stronger dollar and bond yields, while investors awaited for US inflation data later in the day.
Spot gold was up 0.2 per cent at $1,732.49 per ounce by 0245 GMT, while US gold futures rose 0.1 per cent to $1,733.50.
"Lingering Delta virus concerns are offering some safe-haven inflows into gold in the Asian session, but gold is still struggling to recover from the flash crash on Monday," said Stephen Innes, managing partner at SPI Asset Management.
"Obviously, with the Federal Reserve communication taking a more hawkish turn coupled with the strong US non-farm payrolls data, markets are a little bit nervous about taking it (gold) higher."
Risk sentiment in wider financial markets remained subdued, as coronavirus cases in several Asian countries continued to surge, threatening the economic outlook and driving some investors towards safe-haven assets.
But the dollar index held firm near a three-week high against its rivals, while US Treasury yields hit their highest levels since mid-July.
Investors now await the monthly US personal consumption report due at 12:30 GMT that could influence the Fed's timeline to taper monetary support.
The current inflation spike shouldn't push the Fed to tighten monetary policy prematurely, with more months of labour data needed before any changes, Chicago Fed president Charles Evans said on Tuesday.
Indications in recent days of an improving labour market has raised fears of a sooner-than-expected US interest rate hike, sending gold prices to a four-month low on Monday.
Gold is viewed as a hedge against higher inflation, but a Fed rate hike would dull bullion's appeal as it would increase the opportunity cost of holding the non-yielding metal.
Silver gained 0.1 per cent to $23.34 per ounce. Platinum gained 0.1 per cent to $1,003.98 and palladium was steady at $2,642.87.