Gold inched higher on Thursday as the dollar fell against a basket of currencies after the release of soft economic data overnight.
Spot gold rose 0.4 percent to $2,033.33 per ounce, while U.S. gold futures were up 0.1 percent at $2,050.65.
A weaker dollar made bullion cheaper for rival denominations as weak readings on labor costs and private sector employment added to dovish Fed bets.
Payroll processor ADP said private sector employment rose by 103,000 jobs in November after climbing by a downwardly revised 106,000 jobs in October.
Economists had expected private sector employment to advance by 130,000 jobs compared to the addition of 113,000 jobs originally reported for the previous month.
U.S. unit labor costs were much weaker than initially thought in the third quarter, adding to dovish Fed expectations.
Traders now brace for the U.S. jobs report, due Friday for important clues on the Fed's rate trajectory.
Economists currently expect U.S. employment to increase by 185,000 jobs in November after an increase of 150,000 jobs in October. The jobless rate is expected to hold at 3.9 percent.
As inflation concerns ease, investors are pinning hopes that the Federal Reserve will cut interest rates as early as the first quarter next year.
