Gold eased on Thursday after European Central Bank chief Mario Draghi signaled it could cut interest rates further, pressuring the euro against the dollar, but moves were muted ahead of U.S. jobs data.
Volumes were thinned by traders' reluctance to take big positions during the U.S. Independence Day holiday.
European stocks rose and the euro fell on Thursday as the region's top central bank pledged not to let stimulus withdrawal in the United States and renewed euro zone tensions derail the bloc's recovery.
The ECB left its main interest rates unchanged as expected at record lows of 0.5 percent. Draghi said the bank expected its key interest rates to remain at current or lower levels for an extended period.
The news weighed on gold, which tends to move in the opposite direction to the dollar, but prices held in a range as traders awaited U.S. non-farm payrolls data on Friday.
"There has been not much action today and with the Draghi announcement, we have seen fairly dovish monetary policy continuing, as expected," Mitsubishi precious metals analyst Jonathan Butler said.
"I think this is very much a calm before the storm ... the U.S. is out today and the focus is all on non-farm payrolls tomorrow, which I think is potentially the storm - if the data comes in line with expectation there may be more selling for gold," he added.
Friday's U.S. non-farm payrolls report is expected to show the economy created 165,000 jobs last month. The data could affect when the Federal Reserve will begin tapering off its $85 billion monthly bond-buying stimulus program.
Gold posted its biggest quarterly loss on record in the April-June period, down 23 percent. Selling was exacerbated by comments from Fed Chairman Ben Bernanke last month that the U.S. economy was recovering strongly enough for the central bank to begin pulling back on its stimulus in the next few months.
This would support a rise in interest rates, making gold less attractive.
Gold has jumped 7 percent since hitting its lowest price in almost three years at $1,180.71 last Friday, but many traders view those gains as a typical short-term rally that follows a significant decline.
Political turmoil in Portugal, where talks over the government's future threatened to reignite the euro zone crisis, sparked some safe-haven gold buying which now appeared to be exhausted.
Physical demand for gold was lukewarm despite the recent fall in prices, and premiums remained steady in main markets as refineries prepared to shut for house-keeping during the summer, traders said.
"Our coin dealers in Australia have seen a good response to this recent drop. But it is not the same response as we got in April (when prices fell the most in 30 years)," said Bron Suchecki, manager of analysis and strategy at the Perth Mint.
The mint's depository business has not seen significant liquidations but the inflows have dropped off, he said.
Silver fell 1 percent to $19.48 an ounce. Platinum fell 0.2 percent to $1,334.74 an ounce and palladium dropped 1 percent to $675.72 an ounce.