Gold settled 1 percent lower on Thursday, a day after the Federal Reserve announced a further cut in its stimulus program and reiterated its confidence in the U.S. economic outlook despite weak first-quarter growth.
Outflows resumed from bullion-backed exchange-traded funds, suggesting investor confidence in the metal remains soft.
Optimism over the health of the U.S. economy suggests the Fed will keep paring back its monetary easing program, relieving downward pressure on long-term interest rates and taking the heat out of inflation fears. Gold is seen as a hedge against inflation risk.
The dollar steadied on Thursday after dropping sharply in the previous session following the weak growth data.
In the latest economic reports, jobless claims unexpectedly rose in the latest week, though the underlying trend continued to point to improving labor market conditions. Separately, U.S. consumer spending recorded its largest increase in more than four and a half years in March.
The next market focus will be U.S. non-farm payrolls data for April, scheduled for release on Friday.
Top buyer China has seen sluggish interest since the end of January. Consumers and importing banks have been buying less since the Chinese New Year break due to a weaker yuan.
Chinese prices were at a discount to global benchmarks for most of March, but have now recovered to trade about par.
Demand could pick up in second-biggest consumer India, which celebrates Akshaya Tritiya on Friday, a traditional time to buy gold.
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