Gold flat as investors weigh U.S.-Iran tensions, focus on inflation data

"We're being whipsawed and moving sideways with volatility," said Daniel Pavilonis, senior market strategist at RJO Futures.

"Tensions with Iran are supporting gold, and while the broader outlook remains quite bullish, we could still see one more leg down driven by factors outside the Iran situation."

U.S. President Donald Trump warned Iran that it must reach a deal over its nuclear program or "bad things" will happen, and appeared to set a 10-day deadline before the U.S. might take action.

Geopolitical and economic flashpoints tend to work in gold's favour, as the yellow metal is traditionally viewed as a safe store of value.

The minutes from the Federal Reserve's January 27-28 meeting, released on Wednesday, showed policymakers were split on the monetary policy path ahead, with several open to hikes if inflation stays high, while others favoured cuts if price pressures ease.

U.S. weekly jobless claims fell to 206,000 in the week to February 14, well below expectations for a reading of 225,000, reinforcing the strength signaled by last week's robust monthly employment report.

Investors are now awaiting the release on Friday of the U.S. Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge for further clues on the U.S. central bank's policy trajectory.

Markets currently expect this year's first U.S. interest rate cut to occur in June, according to CME Group's FedWatch Tool . Non-yielding gold tends to do well in an environment of low interest rates.

Spot silver rose 0.6% to $77.66 per ounce after climbing more than 5% on Wednesday.

Spot platinum fell 0.8% to $2,054.08 per ounce, while palladium lost 2.6% to $1,671.34.