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Gold prices hovered near a 2-1/2-month high on Thursday as escalating Middle East turmoil buoyed demand for the safe-haven asset, while investors awaited U.S. Federal Reserve Chair Jerome Powell's speech due later in the day.

Spot gold was steady at $1,947.45 per ounce by 0318 GMT after hitting its highest since Aug. 1 on Tuesday. U.S. gold futures eased 0.4% to $1,959.70.

"Gold's resilience in the face of rising yields and a rebounding U.S. dollar, especially over the past several days, have really been a testament to the geopolitical backdrop," said Ilya Spivak, head of global macro, Tastylive.

U.S. President Joe Biden pledged to help Israel and the Palestinians during a visit on Wednesday, but a deadly hospital blast that he ascribed to an errant rocket fired by Gaza militants derailed talks to prevent the war from spreading.

Gold, often used as a safe store of value during times of political and financial uncertainty, has risen over $130 or nearly 8% since falling to a seven-month low on Oct. 6. [USD/] [US/]

Market focus will be on Powell's speech to the Economic Club of New York for more cues on the interest rate path after recent dovish comments from several Fed officials.

The Fed will keep its key interest rate on hold on Nov. 1 and may wait longer than previously thought before cutting it, according to economists in a Reuters poll.

"The Fed is comfortable with being on hold at this point. I think that is pretty much the status quo for markets. I don't think there's a whole lot to reprice there and doubt the Fed Chair is going to fight that sentiment," Spivak said.

Higher rates raise the opportunity cost of non-yielding gold, which is priced in dollars.

Limiting gains, benchmark U.S. 10-year Treasury yields scaled a fresh 16-year high.

Spot silver was flat at $22.86, platinum slipped 0.5% to $881.24 and palladium fell 0.3% to $1,125.35.