Gold prices dropped on Wednesday, hovering just above the lowest level in nearly six years on pressure from a rebounding dollar after strong U.S. economic data heightened expectations of an interest rate hike from the Federal Reserve next month.
Manufacturing output rose well above economists' expectations in October and a gauge of U.S. business investment plans surged.
"The orders number is surprisingly positive and that's what's weighing on the market," said Rob Haworth, senior investment strategist for U.S. Bank Wealth management in Seattle.
fell 0.4 percent to $1,070.36 an ounce, not too far from a near-six-year low of $1,064.95 hit last week. On Tuesday it rose 1 percent after news that Turkey shot down a Russian jet near the Syrian border.
"Speculative sentiment has shifted to net short for the first time in a long time. The question is, how much shorter do we get?" said Haworth.
U.S. gold for December delivery settled down 0.4 percent at $1,070 an ounce as the dollar rebounded from Tuesday's losses and rose by as much as 0.7 percent against a basket of currencies, making gold more expensive for foreign currency holders.
Traders said dealings were relatively quiet ahead of the U.S. Thanksgiving holiday on Thursday.
"The Turkey-Russia tension has only had a limited impact and now gold is back on its downward trend mainly due to the dollar and rate hike expectations," Commerzbank analyst Daniel Briesemann said.
"Uncertainty before the next Fed meeting will remain high and prices could head even lower in the next couple of weeks."
Gold has been pressured by increasing views that the Federal Reserve will hike U.S. rates next month for the first time in nearly a decade. Higher U.S. rates would increase the opportunity cost of holding non-yielding bullion, weighing on prices.
Spot palladium turned sharply higher by as much as 4.3 percent to $560 an ounce after nearing last week's three-month low.
"News reports that Russia's State Depository purchased platinum and palladium have galvanized the market; in the case of palladium, triggering rapid short covering," said James Steel, chief metals analyst at HSBC Securities in New York.
Platinum nudged down to a seven-year low of $827.75 an ounce before turning up 0.8 percent to $846.35.
Silver was down 0.4 percent at $14.14 an ounce, having hit a six-year low of $13.86 on Monday.