Spot gold was up 0.2% to $1,807.57 per ounce as of 0303 GMT, after dropping 1% in the last session. U.S. gold futures fell 0.1% to $1,814.30.

The dollar index slipped 0.2%. A weaker greenback makes bullion more appealing to buyers holding other currencies. Benchmark U.S. 10-year Treasury yields eased after hitting a six-week high in the previous session. [USD/] [US/]

Traders will scan the weekly U.S. jobless claim numbers due at 1330 GMT, for their likely influence on the Fed's rate-hike strategy.

"Jobless data will be important. If it shows an increases in claims, then it should weaken dollar and support gold," said Ajay Kedia, director at Kedia Commodities, Mumbai.

Bullion is on track for a yearly decline of about 1% pressured by aggressive U.S. rate hikes. However, prices have risen nearly $200 from a more than two-year low hit in September on hopes that the U.S. central bank might slow its pace of interest rate hikes.

The Fed slowed its pace of rate hikes to 50 basis points (bps) in December after four consecutive increases of 75 bps each, while Fed Chair Jerome Powell has emphasized the need to keep rates elevated for a time to fight inflation.

Higher rates dim gold's anti-inflationary appeal and increase the opportunity cost of holding the asset since it pays no interest.

"In 2022, gold has already priced in the rate hikes. In 2023, gold will be well supported by geopolitical tensions, recession woes and central bank buying," added Kedia.

"Gold ETFs (exchange traded funds) are also starting to rise." [GOL/ETF]

Spot silver gained 0.2% to $23.57, platinum rose 0.3% to $1,010.67 and palladium was up 0.2% to $1,786.97.

(Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh.V)

By Ashitha Shivaprasad