Gold prices firmed on Thursday as the dollar faltered following dovish comments from US Federal Reserve Chair Jerome Powell, calming investor concerns over the pace of rate hikes.

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Spot gold was up 0.4 percent at $1,225.34 per ounce at 0700 GMT. Prices climbed about 0.6 percent on Wednesday, their biggest one-day percentage gain since November 16.

US gold futures were up 0.1 percent at $1,225.1 per ounce.

"The dovish Fed stance was relatively constructive from pure dollar trade perspective and it could edge off the dollar and continue to do so until the year end, which is quite significant for gold prices," said Stephen Innes, APAC trading head at OANDA in Singapore.

The dollar slipped from a two-week high on Wednesday after Powell said interest rates are just below neutral, raising expectations that the US central bank is closer to the end of its rate hike cycle.

"A weaker dollar helps other local currencies such as China and India get back in the game, which could add to gold's lustre," Innes added.

A weaker greenback makes the dollar-denominated gold cheaper for other non-US buyers.

However, gains in gold were being limited by increased interest in riskier assets, analysts said.

A robust Wall Street buoyed Asian shares on Thursday. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent.

Investors expect more clues on the Fed's monetary tightening path from the minutes of the US central bank's November 7-8 meeting, due later on Thursday. The Fed has raised rates three times this year.

Higher US interest rates tend to boost the dollar, and also increase the opportunity cost of holding gold, which does not pay interest.

Markets also focused on the G20 summit in Buenos Aires this weekend, where U.S. President Donald Trump and his Chinese counterpart, Xi Jinping are scheduled to discuss trade matters.

Gold prices lost to dollar this year as the investors preferred the safe-haven currency as the US-China trade war unfolded and US interest rates rose.

"We are seeing very good resistance for gold at $1,240-$1,242 levels," said Vandana Bharti, assistant vice-president of commodity research, SMC Comtrade Ltd, adding that the bullion was well supported near $1,200.

Among other precious metals, spot silver rose 0.3 percent to $14.36 per ounce.

Palladium fell 0.8 percent to $1,174.50 per ounce, having hit a record high of $1,186.3 in the previous session.

Platinum rose 1 percent to $829.10 per ounce after falling to a seven-week low of $809.50 on Wednesday.