Data on Wednesday showed that the U.S. private sector added 188,000 jobs in June, more than expectations for an increase of 160,000.
The precious metal also drew some safe haven bids amid concerns over political turmoil in Portugal and Egypt.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,252.55 a troy ounce during European morning hours, up 0.75% on the day.
Comex gold rose by as much as 1.1% earlier in the day to hit a session high of USD1,257.15 a troy ounce.
Gold futures were likely to find support at USD1,180.35 a troy ounce, Friday’s low and a 34-month low and near-term resistance at USD1,276.05, the high from June 26.
Gold traders looked ahead to Friday’s highly-anticipated U.S. nonfarm payrolls data for indications of how the recovery in the U.S. labor market is progressing.
Any improvement in the U.S. economy was likely to reinforce the view that the Federal Reserve will begin to taper its bond purchase program in the coming months.
Market players also awaited the European Central Bank’s monthly policy meeting later in the day, as concerns over political turmoil in Portugal continued to weigh.
The ECB was expected to leave interest rates on hold on Thursday and to reiterate that an exit from loose monetary policy remains distant.
Concerns over political instability in Portugal continued to weigh on market sentiment following the resignation of country’s foreign minister on Tuesday and the finance minister on Monday in protest over government austerity policies.
The political crisis raised doubts over the future of the country's coalition government and its ability to honor bailout commitments.
Meanwhile, in Egypt, news of a military coup resulted in President Mohammed Morsi losing power.
Gold prices are on track to post a loss of almost 26% on the year, the worst yearly decline since 1981, after rising in each of the past 12 years, amid speculation the Fed will start to unwind its bond purchasing program in the coming months.
Elsewhere on the Comex, silver for September delivery rallied 1.8% to trade at USD19.65 a troy ounce, while copper for September delivery shed 0.6% to trade at USD3.156 a pound.
Trade volumes were expected to remain light on Thursday, with markets in the U.S. closed for the Independence Day holiday.