Spot gold rose 0.5% to $4,175.19 an ounce by 04:17 GMT on Thursday after weaker-than-expected US inflation data reduced bets on an October interest-rate hike by the Federal Reserve, while markets await US jobs data due on Friday.
The metal began the month higher after falling more than 6% in September, while US gold futures for December delivery rose 0.4% to $4,204.80.
Inflation reduces October rate-hike bets
Data released on Wednesday showed US inflation rose less than expected in August, while the reading for price pressures in July was revised lower. The data reduced expectations for an October interest-rate hike, but traders see a 97% probability of a hike in December.
Higher interest rates reduce the appeal of non-yielding gold.
The upcoming data will be important... to see how the market responds to it and how it shapes expectations for interest-rate hikes
Spivak added: "We are in a situation where the market is dealing with a number of conflicting factors."
Markets await US jobs data
The US September nonfarm payrolls report is due on Friday, with markets looking for further indications on the path of monetary policy.
A steady dollar near its highest level in two months limited gold's gains, as a stronger US currency makes dollar-priced metals more expensive for holders of other currencies.
Bart Melek, head of global commodities strategy at TD Securities, said: "It is unlikely that gold will recoup all of the losses it suffered in September, but there are reasons to believe that the worst phase of the correction is over for now, and that there is a case for prices to rise."
Other precious metals advance
Spot silver rose 1.2% to $61.11, platinum gained 0.7% to $1,717.35 and palladium rose 0.3% to $1,207.12.
On the geopolitical front, Iran said on Wednesday that it had received a response from the United States to its latest proposals to revive the ceasefire that collapsed in the Gulf, days after President Donald Trump said he had rejected the proposal.
