Gold prices firmed above the $2,000 level again Thursday as the dollar and Treasury yields pulled back after soft U.S. data pointed to the economic toll of the Federal Reserve's interest rate-hike cycle, strengthening the case for an imminent pause.

Spot gold climbed 0.6% to $2,004.59 per ounce by 10 a.m. EDT (1400 GMT), after hitting a two-week low of $1969.1 in the previous session. U.S. gold futures rose 0.4% to $2,016.00.

Weekly U.S. jobless claims edged up last week, suggesting the labor market was gradually slowing, while a Philadelphia Fed report showed much lower-than-forecast factory activity in the mid-Atlantic region.

"We saw a disastrous Philly Fed and jobless claims continuing to head higher, so the economy is weakening, some parts more than others," said Edward Moya, senior market analyst at OANDA.

The data pushed the dollar index 0.2% lower, while benchmark Treasury yields also fell.

"For gold to make that run back to record highs, you need the June rate hike completely off the table," Moya added.

Markets are pricing in an 86% chance of a 25 basis-point hike in May, which a Reuters poll found would be the final one, with the Fed holding rates steady for the rest of 2023.

"This week has had some aggressive Fed speak from its speakers and a continuation of that narrative could give the greenback a boost, leaving gold exposed on the downside," DailyFX analyst Warren Venketas wrote in a note.

New York Fed President John Williams said on Wednesday inflation is still at problematic levels and the Fed will act to lower it.

Traders will scan further remarks by Fed policymakers this week, before their blackout period on April 22 ahead of the Fed's May 2-3 meeting.

Platinum edged up 0.1% to $1,091.39 per ounce, its highest in more than three months. Spot silver rose 0.2% to $25.30 while palladium mostly flat at $1,615.77.