Spot gold prices ticked higher on Thursday, as investors prepared for upcoming U.S. employment data which could factor into how the Federal Reserve approaches interest rate decisions in the coming months.

By 06:37 ET (10:37 GMT), spot gold had risen by 0.8% to $4,065.05 an ounce, while gold futures had dipped by 0.1% to $4,077.42 an ounce.

The U.S. economy is tipped to have added 114,000 jobs in June, down from 172,000 in May but still hovering around robust levels. The unemployment rate, meanwhile, is tipped to remain at the 4.3% level it has been at since March.

Over the past three months, the all-important nonfarm payrolls reports have all surpassed projections, pushing up the three-month average of payrolls to a two-year peak of 188,000.

"Our forecast suggests a solid job market, reconfirming that the labor market has reaccelerated from its last year’s soft patch," analysts at Morgan Stanley said in a note.

Signs of continued labor market resilience could grant the Fed more room for potential interest rate hikes this year, especially as policymakers flag concerns over energy-fueled inflation. Oil prices have moderated following the signing of a framework peace agreement between the U.S. and Iran last month, but uncertainty has continued to swirl around whether a crude price spike following the start of a joint U.S.-Israeli assault on Iran in late February will contribute to prolonged inflationary pressures.

Analysts at Deutsche Bank said a "hawkish repricing" in Fed expectations has occurred in recent weeks. Investors are now forecasting the Fed could hike interest rates as soon as September, according to CME’s FedWatch. In theory, lifting rates can corral inflation, albeit at the risk of weighing on the labor market and wider economic growth.

Those hawkish bets were slightly dented this week, particularly after a separate report -- which is less comprehensive than the NFP figure -- showed that private sector payrolls rose by less than forecast in June. On Wednesday, new Fed Chair Kevin Warsh also suggested that inflation risks had eased in the U.S., fueling speculation that the Fed may opt not to raise rates as soon as this month.

The outlook for rates is key for gold, as it can influence the opportunity cost of holding a non-yielding asset like the yellow metal.

Meanwhile, the U.S. dollar index weakened slightly, yet the potential of a more hawkish Fed trajectory has kept the currency floating well above pre-conflict levels. A stronger dollar can bode poorly for bullion, making it more expensive for overseas buyers.

"The firmer currency backdrop [...] is prompting investors to reassess positioning after a volatile few weeks," said Neil Welsh, Head of Metals at Britannia Global Markets, in a note.