US jobless claims total 2.123 million for week ended May 23
SPDR gold holdings at seven-year peak
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Gold pared gains on Thursday, having risen 1% earlier in the session, pressured by an advance in Wall Street, but escalating tensions between the United States and China kept the bullion supported.
Spot gold rose 0.2% to $1,712.35 per ounce by 2:21 p.m. EDT (1821 GMT).
US gold futures settled up 0.1% at $1,728.30.
"US equities have got an underlying bid throughout the entire day," said Phil Streible, chief market strategist at Blue Line Futures in Chicago, adding many investors were liquidating their gold positions for fear of missing out on the equity trade.
Wall Street's major indices rose, boosted by gains in healthcare and technology stocks.
Gold prices were, however, supported by fresh signs of the economic blow from the coronavirus, as well as brewing US-China tensions with the Trump administration looking at options to punish China over its tightening grip on Hong Kong.
"We're seeing tensions increase between US and China... We see the market froth still with this bevy of negative economic data and that's clearly supportive for the gold market," said David Meger, director of metals trading at High Ridge Futures.
The latest US unemployment benefits data held above 2 million last week for a 10th straight week, signaling a deeper economic hit from the pandemic.
"We've tested the $1,700 and bounced back, so if we look forward the market continues to expect more stimulus from the Federal Reserve and other central banks," said Bart Melek, head of commodity strategies at TD Securities.
Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement.
Holdings in the SPDR Gold Trust exchange-traded rose to a seven-year high of 1,119.05 tonnes on Wednesday.
Elsewhere, palladium rose 0.5% to $1,945.63 per ounce, platinum gained 2% to $835.54 and silver eased 0.1% higher at $17.29.