Gold cemented its longest run of monthly declines in more than 16 years on Thursday, as the dollar edged up versus the euro and signs of moderate economic recovery continued to blunt its appeal to investors.
Precious metals extended their losses after a report showed the U.S. manufacturing sector expanding at a more rapid pace than what most analysts had expected.
Spot gold fell more than a percent on the day to $1,578 per ounce, on course for a monthly decline of nearly 4 percent. The embattled precious metal has been in the red for five straight months, the longest such losing streak since late 1996 to early 1997.
Bullion has struggled after 12 years of rising prices as signs of improving economic conditions in China and the United States and stabilization in much of Europe have lured investors away from safe-haven assets.
Reflecting the negative sentiment among fund investors, an exodus from the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, continued for a seventh consecutive session, marking the longest outflow in the fund's history.
"What we are seeing just now is a lack of love from investors towards gold," Credit Suisse commodity analyst Karim Cherif said. "Why would you be in a market that doesn't pay any dividends and yield, and is most likely to underperform in an environment where economic indicators are seen improving?
"Investors are starting to consider other alternatives, as gold played its role during times when we had high uncertainties and now we are looking at different places where to play the market," he added.
U.S. gold futures finished the session down by $17.60, settling at $1,578.10 an ounce.
U.S. equities opened firmer, tracking gains in Europe, where stocks gained on fresh indications of continued central bank support.
The dollar rose against the euro ahead of the U.S. automatic spending cuts due on Friday in a process called sequestration, barring any last-minute budget deal by the lawmakers.
Economic data showed U.S. gross domestic product expanded at a 0.1 percent annual rate in the fourth quarter, with a slightly better performance in exports and fewer imports leading the government to scratch an earlier estimate that showed a contraction.
Weakness in the euro was also due to lingering concerns about mounting political instability in Italy, while economic data showed inflation in the euro zone fell to 2.0 percent in January from 2.2 percent in December.
"Another reason that discourages investors from buying gold is that inflation is still not a concern in key markets," VTB Capital analyst Andrey Kryuchenkov said.
Lower inflationary pressures, added to recent flows of data from the U.S. and elsewhere showing evidence of an economic recovery, deter investors from buying gold as a risk hedge.
Spot platinum extended early losses to trade down 0.8 percent at $1,583 per ounce, trading a touch above gold's value, having dipped into a discount for the first time in over a month earlier this week. It slipped to a seven-week low at $1,577.49 an ounce on Tuesday.