Gold prices edged up on Thursday as investors waited for developments in drawn-out debt ceiling negotiations in Washington, with gains in bullion capped by the U.S. dollar rising to a more than two-month high.

Spot gold was 0.2% higher at $1,961.77 per ounce by 1155 GMT. U.S. gold futures eased 0.1% to $1,962.60.

With uncertainties around an 11th-hour debt ceiling deal between Democratic President Joe Biden and top congressional Republican Kevin McCarthy, gold is seeing safe-haven flows, said Peter Fertig, an analyst with Quantitative Commodity Research.

The White House and congressional Republicans are expected to resume negotiations on Thursday with as little as a week remaining until a potential economically catastrophic default.

Other markets were also stuck in debt ceiling limbo, with concerns that the wrangling in the United States could cost it an AAA credit rating.

Gold ended lower on Wednesday as minutes from the Federal Reserve's May meeting showed that policymakers "generally agreed" last month that the need for more interest rate increases "had become less certain".

Markets were pricing in a 67% chance of unchanged rates next month, and a 33% chance of a 25-basis points hike, the CME FedWatch tool showed.

Gold, a non-yielding asset, tends to lose appeal in a high interest rate environment.

Fed Governor Christopher Waller said the path ahead would depend on economic data "over the next three weeks."

U.S. GDP estimates and initial jobless claims are due at 1230 GMT.

The safe-haven U.S. dollar rose to its highest since mid-March, making gold less attractive for overseas buyers, while benchmark Treasury yields were near highs seen on March 13.

Gold was "really viewing things through the lens of the dollar," said independent analyst Ross Norman, highlighting that the path of least resistance was lower.

Spot silver eased 0.1% to $23.0625 per ounce, platinum edged up 0.1% to $1,025.24 while palladium dipped 0.9% to $1,402.99.

(Reporting by Seher Dareen in Bengaluru; Editing by Varun H K, Kirsten Donovan)