On Thursday, gold prices held steady near three-week highs as dismal U.S. economic data increased wagers that the Federal Reserve has limited capacity to continue raising interest rates.

Spot gold edged up by 0.2% to $1,945.49 per ounce, meanwhile gold futures muted at $1,972.25 per ounce.

This week, the yellow metal enjoyed significant gains as the dollar and Treasury yields fell in response to disappointing U.S. GDP and employment figures. Along with rising concerns about an economic downturn in China, dismal data readings from the Asian superpower also contributed to an increase in demand for gold as a safe haven.

This week, as dismal economic data fanned expectations of a less aggressive Federal Reserve, the dollar lost about 1% of its value while Treasury yields fell further from recent highs.

The Federal Reserve's favorite inflation indicator, personal consumption expenditures data, which is due later today, is now the main topic of attention for additional monetary policy indications.

The August nonfarm payrolls report is due on Friday and is anticipated to reveal more softening in the labor market, which will make the Fed less motivated to continue raising interest rates.