Gold settled roughly 1 percent lower on Thursday as encouraging U.S. retail sales and job data fueled speculation on the possible scaled-back U.S. Federal Reserve monetary stimulus, weighing bullion's inflation-hedge appeal.
Platinum group metals also tumbled on easing supply fears after South Africa's top mining union delayed plans to strike.
Gold stayed lower after U.S. government said retail sales rose more than expected in May and first-time applications for jobless benefits fell last week, showing signs of resilience in the economy despite belt-tightening in Washington.
The data was seen as adding to arguments for the Fed to end its $85-billion monthly bond purchases. Analysts said that a gradual end of Fed stimulus has already driven up U.S. short-term interest rates, reflected in the Treasury bond yields, and that keeps gold from rising further.
"It's the old argument that when you foresee rate rises then the opportunity cost of holding gold will be higher and less attractive for investors," Danske Bank annalist Christin Tuxen.
Spot gold was down 0.6 percent at $1,378 an ounce, hovering above a three-week low of $1,366 set on Tuesday. U.S. gold futures ended $14.20 at $1,377.80.
Stimulus unwinding is likely to spell further downside for gold, which is struggling to stay on an even keel with fund money draining away from the metal since prices crashed in April. Bullion is now some 27 percent down from record highs achieved in September 2011.
Markets will watch the Fed policy meeting on June 18 and 19. Most economists expect the Fed to scale back the size of its bond purchases by year-end, and several expect reduced buying as early as September, a Reuters poll showed.
"Gold prices are vulnerable to additional declines over the next few months. You have reduced import demand for gold from India, healthy supply growth this year, and overall reductions in investor interest in the," said Erica Rannestad, precious metals analyst at commodities firm CPM Group.
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Demand from major buyer China, which returned from a three-day holiday on Thursday, held losses in check, dealers said.
Net gold imports into India have fallen from an average of $135 million in the first half of May to $36 million in the second half, the country's finance minister said.
The government has raised the import duty on gold by a third and curbed gold financing by banks and others in an effort to cut its current account deficit. Among other precious metals, silver dropped 1.1 percent to $21 per ounce.
Platinum group metals fell sharply, after South Africa's Association of Mineworkers and Construction Union (AMCU) delayed plans on Thursday to strike at platinum producer Lonmin pending government-led crisis talks.
Platinum was down 2 percent to $1,449, and palladium slipped 3.3 percent to $729 an ounce.