Gold settled lower for a third session on Thursday, as hopes of another interest rate cut by the European Central Bank and new monetary stimulus offered by the Bank of Japan failed to stem heavy selling of bullion by funds.
Palladium dropped around 4 percent, dragged by commodities sell-off led by crude oil as a four-month high in U.S. initial jobless claims dent demand hopes.
Bullion is on track to post its biggest three-day drop since June 2012 as investors pulled more money out of gold exchange-traded funds.
"We have a lot of liquidation of the gold ETFs and the short position on the Comex for gold remains very high, so a lot of the macro hedge fund selling have put pressure on gold," said Howard Wen, metals analyst at HSBC.
Gold earlier fell as much as $1,539.74 an ounce, its lowest since May 30. It was last down 0.6 percent at $1,547.82 an ounce.
U.S. gold futures settled down $1.10 at $1,552.40, with volume on track to finish in line with its 30-day average, preliminary Reuters data showed.
(Read More: What Could Send Gold Into a 'Major Tailspin')
The gold market largely ignored news that the BOJ's pledged about $1.4 trillion into the economy in less than two years, and ECB's promise to cut interest rates again if necessary.
Investors will look toward Friday's U.S. employment data for more signals on the strength of the economy. A strong report could cause gold to fall further, analysts said, because it might make it easier for the U.S. Federal Reserve to end stimulus measures which have made some investors leery of possible inflation in the world's biggest economy.
Analysts expect Friday's report to show American employers hiring at a moderate pace in March, suggesting the economy is gathering momentum.
"If the nonfarm payroll turns out to be a very strong number, there might be room for gold to fall,'' Wen said.
ETF Holdings Down, GFMs Bearish
On Wednesday, there was further liquidation of gold-backed ETFs, with holdings of the world's largest SPDR Gold fund declining another 2.71 tons after the previous session's 8.1 ton outflow.
Bullion holdings held by the world's major gold ETFs fell to their lowest level since August 2012.
Their drop this week also marked one of the heaviest declines since gold ETFs posted a record monthly outflow in February.
Metals consultancy Thomson Reuters GFMS said in a report gold looks likely to enter a bear market cycle in 2014 after more than a decade of gains. The report added to the downward pressure on gold.
Among other precious metals, silver tumbled to its lowest level since July 24 at $26.62 an ounce. It was last down 0.4 percent to $26.80.
Platinum dropped to its lowest since late August at $1,504.50. It was later at $1,512.24, down 1.3 percent, while palladium was down 3.8 percent at $721.71, having earlier hit a one-month low of $720.22.