Spot gold was up 0.7% to $1,959.93 per ounce at 11:42 a.m. EDT (1542 GMT), after hitting its highest level since Sept. 2 at $1,965.93.

U.S. gold futures were up 0.7% at $1,967.80.

"The ECB didn't really change its policy and so we are seeing the U.S. dollar dropping here. That's positive for gold," said Bart Melek, head of commodity strategies at TD Securities.

The dollar fell 0.3%, making gold less expensive for holders of other currencies, as the euro rose after ECB President Christine Lagarde said while it is keeping a close eye on the exchange rate, it is not a monetary policy tool.

Meanwhile, U.S. weekly jobless claims hovered at high levels last week, suggesting the labor market recovery from the pandemic was stalling.

Melek said the recovery was not happening as quickly as would be liked, adding that "there are concerns about a second wave of virus, commodity markets like oil are indicating that perhaps growth is slowing down and all monetary policy will be easing."

The safe-haven metal has risen more than 29% this year on the back of unparalleled stimulus and near-zero interest rates from the global central banks.

Investors now turn their attention to the U.S. Federal Reserve's policy meeting on Sept. 15-16.

"Gold has maintained the 50-day moving average quite well and unless it falls below the August low ($1,863.67), it will remain supported," said Michael Hewson, chief market analyst at CMC Markets UK.

Elsewhere, silver rose 0.6% to $27.17 per ounce, platinum gained 2.5% to $939.06 and palladium was up 1.6% to $2,308.96.

By Sumita Layek