Spot gold rose 0.1% to $1,778.52 per ounce, by 0535 GMT. It has fallen 0.1% so far this week. U.S. gold futures added 0.1% to $1,778.
"The spread of the Delta variant is supporting gold as it can delay economic recovery... (however) the medium-term outlook remains bearish biased because we're embracing the start of the tapering cycle," said Margaret Yang, a strategist at DailyFX.
The highly contagious Delta variant of the coronavirus has made countries in Asia and Europe walk back on reopening plans, while White House said it would send out special teams to hot spots around the country to combat the contagion.
Focus is now on U.S. non-farm payrolls data due at 1230 GMT, which is likely to show an increase of 690,000 jobs last month, as per a Reuters poll.
A print of one million or more in the non-farm payrolls report can expedite Fed's policy tapering and rate-hike plans, Yang said.
U.S. private payrolls and jobless claims data this week has shown the labour market is gathering speed as the economy fully reopens.
The dollar held near three-month highs, making gold expensive for other currency holders.[USD/]
Several Fed members have said in recent weeks that the central bank could start discussing tapering in the coming months. While a "taper tantrum" poses a downside risk to gold, inflation worries will support prices in the near term, Fitch Solutions said in a note.
Silver rose 0.2% to $26.07 per ounce, while platinum gained 0.6% to $1,088.73.
Palladium eased 0.1% to $2,762.16, and was set for a second straight weekly gain.
(Reporting by Sumita Layek in Bengaluru; Editing by Uttaresh.V and Rashmi Aich)
By Sumita Layek
