Gold edged up on Thursday, recovering from a steep decline experienced during the week as solid U.S. figures raised concerns about the Fed's decision to drop interest rates early.

Spot gold added 0.1% to $2,008.89 per ounce, while gold futures advanced by 0.2% to $2,010.40 per ounce.

As the dollar and Treasury yields recovered this week, driving the gold to erases most of the gains earned through December and nearly broke below the coveted $2,000 per ounce mark.

The appetite for gold as a safe haven was not bolstered by further military activity in the Middle East; instead, speculators shifted their focus to the dollar due to the expectation of longer-term, higher U.S. rates.

Nevertheless, gold prices enjoyed a slight bounce on Thursday and found some support near the $2,000 per ounce.

The dollar surged to a one-month high, and Treasury rates continued to rise as robust retail sales figures for December came better than projections.

The figures supported recent remarks made by Fed that the central bank will maintain higher interest rates for an extended period of time due to the strength of the US economy.