Gold prices traded higher on Wednesday but pared gains from earlier in the session, after a strong U.S. employment report suggested the Federal Reserve may keep interest rates unchanged for some time.

Spot gold was up 0.8% at $5,067.09 per ounce by 09:02 a.m. ET (1402 GMT), after rising as much as $5,118.47 earlier in the session.

U.S. gold futures for April delivery gained 1.1% to $5,087.80 per ounce.

U.S. job growth accelerated in January and the unemployment rate fell to 4.3%, signaling labor‑market resilience that could give the Fed room to hold rates steady while it monitors inflation.

The strong employment report "will shut the tiny crack in the door for a March rate cut that retail sales opened yesterday," said Tai Wong, an independent metals trader.

U.S. retail sales were unexpectedly unchanged in December, data showed on Tuesday, potentially setting consumer spending and the economy on a slower growth path heading into the new year.

The Federal Reserve will keep rates unchanged through Chair Jerome Powell's term ending in May but cut immediately afterward in June, a Reuters poll showed, with economists warning that policy under his likely successor, Kevin Warsh, could become too loose. (FEDWATCH)

Non-yielding gold typically performs well during periods of geopolitical or economic uncertainty and when interest rates are lower.

Investors focus now await the U.S. consumer price index report due on Friday.

"Since the big collapse, gold has shown mostly higher highs and higher lows, with buyers still confident amid the debt and divest‑from‑the‑U.S. narrative," Wong said.

Gold suffered sharp two‑day sell‑offs on January 30 and February 2 after U.S. President Donald Trump announced his pick for Fed chair, though it remains up 17.5% for the year on growing geopolitical and economic uncertainty.

Spot silver was up 5.1% at $84.84 per ounce, after falling more than 3% in the previous session.

Spot platinum rose 3.3% to $2,155.25 per ounce, while palladium added 2.9% to $1,757.96.