Gold prices steadied Thursday after two days of losses as the dollar pulled back slightly ahead of a Senate vote on the government funding bill.
Gains were kept in check by expectations that the U.S. Federal Reserve would soon start to unwind bond purchases.
Spot gold traded flat at $1,726.66 per ounce, while U.S. gold futures were up 0.2 percent at $1,726.50.
U.S. Senate Majority Leader Chuck Schumer said that Senators have reached a deal to avoid a government shutdown on October 1.
The Senate will vote on legislation today, which will keep the government funded through December 3.
Senate Republicans blocked the House plan on Monday amid clashes over raising the debt ceiling.
The dollar index paused while benchmark U.S. 10-year Treasury yields held above 1.5 percent, a level not seen since late-June after Federal Reserve Chair Jerome Powell warned inflation could be held up longer than previously thought due to supply chain problems.
However, Powell and his counterparts at the European Central Bank, Bank of Japan and Bank of England voiced cautious optimism that supply-chain disruptions lifting inflation rates around the world would ultimately prove temporary.