The U.S. currency also lost ground against the euro after the European Central Bank (ECB) said it expects euro zone economic recovery to broaden and strengthen and ruled out a cut to deposit rate.
Gold's rebound on Wednesday was however capped by stronger European shares, hitting a 14-year high.
"Gold is having to really compete with other financial assets that offer yields," Societe Generale analyst Robin Bhar said.
"There is still a lot of work for gold to do on the upside, there are too many headwinds at the moment and I don't think that is going to change quickly."
The Federal Open Market Committee (FOMC), which meets on April 28-29, will be closely watched for clues on when the U.S. central bank could raise interest rates.
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A U.S. rate increase, which would be the first in nearly a decade, dims gold's appeal as it does not pay interest.
Data showing China's economy grew 7 percent in the first quarter, the slowest in six years, suggested that physical demand from the world's No. 2 consumer would remain tepid this year.
Premiums for physical gold on the Shanghai Gold Exchange picked up to $3-$4 an ounce over spot from just above a dollar earlier this week, although analysts say a slowing economy could cap Chinese demand.
"Given structural reforms and all this belt-tightening because of the perceived slowdown, I don't think there'll be much demand for gold for jewellery or for investment," said Howie Lee, an analyst at Phillip Futures.