Gold prices were flat on Thursday even though the US dollar rally lost steam, as safe haven bids for bullion declined after political tensions in Italy eased, which also lifted the euro. "The situation in Italy is fading. We're not seeing much of a safe haven bid for gold," said Chris Gaffney, president of world markets at EverBank.
Italy's two anti-establishment parties renewed attempts to form a government and avoid snap elections that investors fear would serve as a quasi-referendum on Rome's membership of the euro zone.
Spot gold was flat at $1,300.66 ounce by 2:07 p.m. EDT (1807 GMT). It was down nearly 1 percent for the month, headed for its second straight monthly decline. US gold futures for June delivery were also essentially flat, settling down just $1.40, or 0.1 percent, at $1,300.10 per ounce.
Gold got an early boost as the dollar fell for a second day versus the euro, making dollar-priced gold cheaper for non-US investors. Italian bonds and European equities posted a second day of gains.
Escalating trade tensions also supported gold, traders said.
Tariffs "would definitely reduce risk appetite, and gold will benefit from this," said Bart Melek, head of commodity strategy at TD Securities.
Investors also awaited US employment data coming on Friday. "We're still focused on wage growth to see if we'll see any kind of wage inflation," EverBank's Gaffney said.
Signs of inflation often encourage investors to buy gold, but higher wage growth would give the US Federal Reserve more incentive to hike interest rates. This could dent the appeal of gold, which does not bear interest.
Meanwhile, spot silver declined 0.3 percent at $16.46 an ounce, but was on track for a monthly rise of about 1 percent, its biggest since January.
Platinum gained 0.1 percent at $907.40 per ounce, headed for a 0.5 percent monthly increase.
Palladium increased 0.2 percent at $987.50 an ounce and was headed for its biggest monthly gain since December, climbing over 2 percent.