After falling to a five-week low of $3,120, gold attracted buying and prices returned above $3,200. U.S. data showed that the Producer Price Index (PPI) unexpectedly fell 0.5% in April, missing expectations for a 0.2% increase. Core PPI fell 0.4%, lower than the expected 0.3% increase.

Meanwhile, retail sales slowed over the same period, rising just 0.1% month-on-month, with March's figure revised upward to 1.7%. Economists had expected the figures to be unchanged from the previous month.

Initial jobless claims rose to 229,000 in the week ended May 10, in line with expectations and unchanged from the previous week.

XAU/USD rose slightly following the data release and bulls have now recaptured the $3,200 mark, while the U.S. Dollar Index (DXY) fell 0.15% to 100.88.

Market participants increased bets the Federal Reserve will cut interest rates by 53 basis points in 2025, up from the 48.5 expected on Wednesday.

The easing of the US-China trade war has affected gold prices and risk appetite has improved. The price of gold fell from about $3,326 to $3,207, a loss of more than $120. However, gold prices have recovered as U.S. data reflected economic weakness.

Later this week, the U.S. economic calendar will include further speeches from Federal Reserve officials and the University of Michigan's consumer sentiment index.