Spot gold was up 0.4% at $1,966.89 per ounce by 1418 EDT (1818 GMT) on weaker-than-expected Chicago Purchasing Managers' Index (PMI) data, before paring some gains on stronger U.S. jobs data.
It has lost nearly 1.1% this month and over $100 from near-record highs scaled earlier in May.
U.S. gold futures settled 0.3% higher at $1,982.10.
"We've had kind of a push-pull effect," amid support from lower yields and pressure from the dollar, said David Meger, director of metals trading, High Ridge Futures. [US/] [USD/]
"With the job's data relatively strong, concerns about the possibility of further rate hikes would obviously have a tendency to pressure gold... and yet on the other side, we have the PMI data pulling in the opposite direction."
The dollar index headed for a monthly gain, making bullion less attractive to overseas buyers.
Any decision by the Fed to hold its benchmark overnight interest rate steady should not be taken to mean the U.S. central bank is done tightening monetary policy, Fed Governor Philip Jefferson said.
High interest rates dim appeal for zero-yield gold.
But key support around $1,950 could fuel momentum trade to push gold back to $2,000, said Edward Moya, senior market analyst at OANDA.
Traders also focussed on developments around the U.S. debt ceiling, with the U.S. House of Representatives due to vote on a bill to lift the limit.
Silver rose 1.5% to $23.56 per ounce, platinum fell 1.6% to $998.31, while palladium slipped 2.5% at $1,366.29. All three were set for a monthly drop.
Russia's Nornickel saw the global palladium market swinging to a surplus in 2024 from a deficit in 2023 as recycling outpaces a demand recovery.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich, Aurora Ellis and Shilpi Majumdar)
By Ashitha Shivaprasad
