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April 28 Gold reversed losses to climb to its highest level in a week on Thursday, as the U.S. dollar slumped more than 2 percent against the yen after the Bank of Japan surprised markets by keeping monetary policy steady.

"The longer the Fed holds off on raising rates, the better for gold," said HSBC analyst James Steel. "The bullion market will now focus on the prospects of a Fed hike at the next meeting in June, and the possibility that the Fed will tighten later this year may help cap bullion prices."

Gold has rallied 17 percent this year on expectations that the Fed will not raise rates aggressively this year due to global economic risks. The U.S. central bank raised rates in December for the first time in nearly a decade.

"The longer the Fed holds off on raising rates, the better for gold," said HSBC analyst James Steel. "The bullion market will now focus on the prospects of a Fed hike at the next meeting in June, and the possibility that the Fed will tighten later this year may help cap bullion prices."

U.S. GDP data due later in the session will be eyed for trading cues. Economic growth likely stalled in the first quarter as domestic demand cooled and a strong dollar continued to undercut exports, but a pick-up in activity is anticipated given a buoyant labour market.

"The short-term outlook for gold will now be heavily influenced by domestic data releases in the U.S.," ANZ said.

FXStreet analyst said “1,255 represents immediate resistance area, as per sequence of intraday highs printed on April 19th-20th, followed by 1,260 ahead of critical 1,270; above the latter, expect 1,280 to come into play. On the downside, 1,250 should see buyers re-emerge to defend the level, followed by 1,245 daily pivot point ahead of today's low at 1,240. Note, the next event to inject volatility in the pair will be today's US GDP Q1, due at 12.30 GMT.”

Reference: Reuters, FXStreet