Gold prices were little changed on Thursday, retreating further from the previous session's seven-week high as the dollar extended gains after U.S. data pointed to a strengthening economy.
The number of Americans filing new claims for unemployment benefits fell last week, while U.S. consumer spending advanced at a brisk clip in November.
Spot gold was up 0.1 percent to $1,228 an ounce. The metal rose to a seven-week high of $1,238.20 on Wednesday, before giving up gains on steadier equity markets.
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Gold was still on track for a 2.6 percent weekly gain so far, the biggest since mid-October, as it benefited from a pullback in the dollar over the past few sessions.
U.S. gold futures were flat at $1,229 an ounce.
The dollar was up 0.4 percent against a basket of currencies and was expected to firm further ahead of the U.S. Federal Reserve's policy meeting next week, which could give cues on the timing of the central bank's interest rates hikes.
A sooner-than-expected rise in interest rates could boost the dollar and hurt non-interest-bearing bullion.
"The market's focus is on the 'considerable time' language, whether the Fed will take that out or not," Societe Generale analyst Robin Bhar said.
"We think the first interest rate hike could happen in June 2015."
Fed officials have so far stressed that subdued inflation may keep interest rates near zero for an extended period of time.
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European equities reversed initial gains, but U.S. shares opened higher, while a decline in crude oil paused, although prices remained around five-year lows.
Weakness in energy prices has weighed on gold sentiment lately, dulling the metal's appeal as a hedge against oil-led inflation.
Safe-haven demand and short covering have been behind gold's recovery from 4-1/2-year lows hit last month, traders said.
An improvement in sentiment was seen in the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. The fund saw inflows of nearly 3 tonnes on Wednesday, bringing total holdings to 724.80 tonnes.
Despite those inflows, holdings are still firmly near six-year lows.