The 27-year-old former world number one is competing in her third Games. Victory would complete her medal set after silver in Rio and bronze in Tokyo and yield the last point she needs to qualify for the women's golf LPGA Hall of Fame.
South Korean-born Ko, a twice major winner who first topped the world rankings when she was 17, made six birdies and one bogey to move up to third on the leaderboard at five under par after the second round at Le Golf National.
"People get so excited about birdies," Ko told reporters.
"But at the same time, I think pars are sometimes what kind of get some momentum going, because you're not losing shots. And around this golf course, that's so important."
The difficulties of the course were again apparent on Thursday. Players hitting consistently like Ko and leader Morgane Metraux of Switzerland made progress while others like overnight leader Celine Boutier of France and American defending champion Nelly Korda fell foul of water and bunker hazards.
"I think this is the toughest golf course we've played in the past three Games," Ko said.
"Honestly, this golf course is so hard. It's like it's hard to think about the other things," she added.
Ko is part of a 60-strong field competing for podium positions at the end of the four-round tournament on Saturday.
Impressive Swiss
Metraux propelled by a sensational front-nine holes, while French overnight leader Celine Boutier was among those to suffer on a testing course.
The 27-year-old Swiss enjoyed two eagles and four birdies in a bogey-free front nine holes to reach 10 under par for the tournament. She suffered three bogeys on the back nine but limited the damage to reach the clubhouse at eight-under par.
Metraux said she stuck to a straightforward plan and took advantage of favourable weather conditions.
"I didn't know the golf course until Monday. So it's all very new for me," Metraux said after her round.
"But it's simple in a way that you know that you just have to hit fairways and greens here. If you don't, it's going to be very difficult."
Metraux is an Olympic debutante after choosing not to go to Tokyo while she was chasing a spot on the prestigious LPGA tour.
Her sister Kim represented Switzerland three years ago alongside Albane Valenzuela, who is in Paris for her third Games.
China's Yin Ruoning moved up to second place after matching Boutier's first-day round of 65 to go seven under, followed by Ko at five-under in third.
- Additional reporting RNZ
