Gold fell around 1 percent on Thursday as stronger-than-expected economic data and upbeat corporate results boosted global equity markets, while the dollar index held near a one-week high and demand for physical metal eased.
Bullion posted its second straightly daily loss after data showed new claims for U.S. unemployment benefits held below 300,000 for a sixth straight week last week, suggesting the labor market was shrugging off jitters over growth.
The S&P 500 index soared more than 1.5 percent in a broad rally, as strong results from industrial bellwethers reassured investors that corporations continue to fare well despite concerns about global economic growth.
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However, outflows from gold-backed exchange-traded funds suggested investment appetite for bullion was softening, analysts said.
Chart: Precious Metals
"We're still having outflows from physically backed gold funds," Natixis analyst Bernard Dahdah said. "Western investors still aren't very excited about holding gold."
Spot gold was down 0.9 percent at $1,229.12 an ounce, having earlier hit a one-week low of $1,226.17.
U.S. gold futures for December delivery settled down $16.40 an ounce at $1,229.10, with volume in line with its 30-day average, preliminary Reuters data shows.
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, fell 0.3 percent on Wednesday to 749.87 tonnes, the lowest since late 2008. Outflows from the fund this week have now topped 11 tonnes, the most of any week since mid-September.
Global stock markets are now well above last week's lows on worries about world economic growth. Gold rallied to a six-week high at $1,255.20 on Tuesday before stock markets turned around.