Spot gold was up 0.3pc at $1,337.41 per ounce, as of 0706 GMT. US gold futures were also 0.3pc higher, at $1,341.40 an ounce.
"We can see strong support at $1,330 for gold, and the metal looks to trade upside with expectations of lower interest rates," said Peter Fung, head of dealing at Wing Fung Precious Metals.
"Also, we are still worried about the (US-China) trade war and people are still looking at gold as a safe haven," he said.
Data from the Labor Department showed on Wednesday US consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy increased pressure on the Federal Reserve to cut interest rates this year.
Fed policymakers are scheduled to meet on June 18-19 against the backdrop of rising trade tensions, slowing growth and a sharp step-down in hiring in May which have led financial markets to price in at least two rate cuts by the end of 2019.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
The dollar index versus a basket of six major currencies was down 0.1pc on Thursday, having risen more than 0.3pc overnight.
On the trade front, US President Donald Trump said he had a "feeling" a US-China trade deal could be reached, but reiterated his threat of increasing tariffs on Chinese goods if there is no agreement.
However, Trump declined to set a deadline for levying tariffs on another $325 billion of Chinese goods and called the relationship with Beijing good but "testy" after China walked back commitments for a trade deal.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.5pc to 759.70 tonnes on Wednesday from 756.18 tonnes on Tuesday.
On the technical side, spot gold is expected to retest a resistance at $1,339 per ounce, a break above which could lead to a gain to $1,346, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver rose 0.6pc to $14.82 per ounce and platinum gained 0.6pc to $813.30.
Palladium was up 0.4pc at $1,411.90 an ounce after hitting a more than one-month high of $1,415.96 earlier in the session.