Gold edged higher on Thursday as a softer tone to the dollar helped to support prices, though continued outflows from bullion-backed funds showed investor sentiment remained weak as other assets like stocks rose.
A sell-off since Oct. 31 has sent gold sliding below the key technical level of $1,180 an ounce to a 4-1/2-year low of $1,131.85. It has since recovered modestly on short-covering, and demand for physical metal from price-sensitive buyers.
Spot gold was last up 0.2 percent at $1,162, while U.S. gold futures for December delivery were up $1.90 an ounce at $1,161.
The dollar was down 0.2 percent against the euro on Thursday. The U.S. unit hit session lows after New York Federal Reserve President William Dudley said any premature tightening in America's monetary policy could hurt the economic recovery.
A run of relatively firm data had raised expectations that U.S. rates will rise sooner rather than later, pressuring non-yielding gold. That has already largely been priced into the metal, analysts said.
``The interest rate (expectations) are being pushed further and further back - our economists are now talking about September or October next year,'' Citi analyst David Wilson said.
``Unless we see dramatically better data, or the U.S. dollar dramatically surges, I think we'll stay in this range for the time being.''
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 1.8 tons to 722.67 tons on Wednesday, the seventh straight day of declines.
Some support was offered by buying of physical gold in China overnight, dealers said.
However, the World Gold Council reported on Thursday that Chinese demand fell heavily in the third quarter, with jewelry demand down 39 percent and bar and coin buying 30 percent lower. That helped knock global demand 2 percent lower.