Gold settled modestly lower on Thursday as the euro rebounded against the dollar after European Central Bank chief Mario Draghi said the bank would reevaluate the case for more stimulus next year, but remained under pressure ahead of key U.S. data on Friday.
Strength in the U.S. currency makes dollar-denominated gold more expensive for holders of other currencies.
Investors had been looking for a clear sign from Draghi that the ECB was heading for a move into the sort of outright printing of money, or quantitative easing, carried out by other central banks in recent years.
was last at $1,206.87 an ounce, down 0.2 percent but off an earlier low of $1,201.07, while U.S. gold futures for December settled down $1.00 at $1,207.70. The euro bounced from a 28-month low to rise 0.3 percent.
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Uncertainty ahead of a key reading of U.S. non-farm payrolls on Friday and caution after wide swings in gold prices on Monday limited the rise and kept prices from building on gains, traders said.
``The market is extremely nervous. A lack of direction is keeping everyone on their toes (with) Monday still very fresh in everyone's minds,'' Afshin Nabavi, head of trading at MKS in Switzerland, said. ``(Gold is) just following the euro tick by tick.''
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Friday's payrolls data will help investors gauge the strength of the U.S. economic recovery and how it will impact interest rates. A run of upbeat U.S. data has supported the view that the Federal Reserve will tighten monetary policy before other central banks.
A rise in U.S. interest rates would lift the opportunity cost of holding non-yielding gold and further boost the dollar.
``We expect a neutral report. It provided a tone of wait and see,'' said George Gero, precious metals strategist for RBC Capital Markets in New York, referring to the payrolls data.
A report released on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week, pointing to an improving labor market.