Gold prices consolidated earlier gains in Asian trade on Thursday, as market participants remain optimistic on the prospect of further trade deals despite rising geopolitical tensions between Russia and Ukraine.
By 3:45 pm AEST (5:45 am GMT), spot gold was down $7.23, or 0.2%, to US$3,365.28 per ounce.
The precious metal had rallied earlier in the week following a series of weak U.S. economic indicators, including a sharp miss in private-sector employment data.
Figures released Wednesday by ADP showed only 37,000 new jobs added in May, down from a revised 60,000 in April and well below expectations of 115,000.
The disappointing data spurred dovish speculation about the Federal Reserve’s policy stance, boosting interest in non-yielding assets like gold.
However, Thursday's session saw the U.S. dollar attempting a modest rebound, driven by hopes for progress in global trade talks.
Traders looked to upcoming conversations between U.S. President Donald Trump and Chinese President Xi Jinping, as well as continued negotiations with the European Union and Canada, for signs of potential resolution to recent tariff disputes.
Still, geopolitical risks remained the primary source of market support for gold. A Ukrainian drone attack on Russian airbases earlier this week targeted what Kyiv claimed were nuclear-capable bombers, further escalating tensions in the region.
Russian President Vladimir Putin responded by casting doubt on the viability of a ceasefire, saying retaliation was inevitable.
After a phone conversation with Putin, President Trump said, "President Putin did say, and very strongly, that he will have to respond to the recent attack on the airfields."
Markets are now bracing for a potential escalation, with investors closely watching further developments in the region.
Looking ahead, speeches from several Federal Reserve officials and the latest U.S. jobless claims data could provide additional direction for gold traders ahead of Friday's closely watched nonfarm payrolls report.
