Gold settled lower on Thursday, after gaining more than 2 percent a day earlier, as investor sentiment was dogged by persistent speculation about the future of U.S. monetary stimulus.
Even while the European Central Bank and Bank of England held off on any new policy action, markets were fixated on U.S. economic snapshots and what signals the fresh economic data give about when the Federal Reserve might start trimming its bond-buying program.
Data released on Thursday showed the U.S. economy grew faster than initially estimated in the third quarter and that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, a sign of recovery in the labor market.
Spot gold was last at $1,232 per ounce, down 0.9 percent on the day, having earlier hit a session low of $1,217.75. U.S. gold futures for February delivery settled 1.2 percent lower, at $1,231.90 an ounce.
"I think what's really hurting gold is that when the Fed minutes for the October meeting came out, they seemed to say that they would be tapering QE (quantitative easing) even if the data only remained adequate. It didn't need to strengthen massively,'' Macquarie analyst Matt Turner said.
"So in a sense there's a bias to the non-farm payrolls. If it's good, it's tapering, and if it's adequate, it's tapering. Our view is that it will happen by March next year. The minutes suggest that's the latest it will happen.''
Bullion posted its strongest gains in more than a month on Wednesday as investors proved over-extended on bets for prices to fall further. The technical backdrop was more dominant than strong U.S. private-sector hiring data and service industry growth in the run-up to Friday's non-farm payrolls.
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