Gold fell nearly one percent on Thursday as investors disappointed by its failure to rally further on the previous day's soft U.S. growth reading cashed in gains, with a retreat in European stocks and the euro adding to selling pressure.
The metal hit a more than two-week high on Wednesday after data showed the U.S. economy unexpectedly shrank in the fourth quarter, holding those gains after the Federal Reserve pledged to maintain a monthly $85 billion bond-buying program.
Its failure to rise further as a rally in stocks and the euro ran out of steam prompted selling.
"Once again (there was) not enough follow-through buying and intraday traders took profits," VTB Capital analyst Andrey Kryuchenkov said. "We failed to breach $1,680 while the Federal Open Market Committee offered little new."
"There is still not enough physical buying... and investors remain very cautious," he added.
The euro halted its rally, falling below a 14-month peak against the dollar, while European shares slipped for a second day as weak German retail sales and poor earnings at its biggest bank unnerved investors.
Usually, ultra-loose monetary policies lend support to gold. Previous rounds of Fed asset purchases drove down interest rates and weakened the dollar as well as spurring rallies in stocks and prompting some to turn to gold as an inflation hedge.
Analysts said that the market had already priced in that it would be premature for the U.S. central bank to discuss abandoning the quantitative easing programme and that the reaction to the FOMC statement would be muted.