Gold closed modestly lower on Wednesday as the latest piece of economic data indicating the U.S. economy is strengthening spurred markets to bring forward the timing of a possible hike in U.S. interest rates.
Data on Wednesday showed initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 280,000, the fourth straight week of declines.
The data followed Tuesday's report that the U.S. economy grew at a 5.0 percent clip in the third quarter, its quickest pace in 11 years.
U.S. gold futures for delivery in February settled $4.50 lower, at $1,173.50 an ounce.
Spot gold, initially supported by a softer dollar, gave up gains after the U.S. data to trade flat at $1,175 an ounce, within reach of a three-week low of $1,170.17 hit on Monday. Any dip below that level could trigger further losses, analysts said.