Gold edged slightly higher on Thursday, as the dollar remained under pressure after the release of a batch of mixed U.S. economic data.
New orders for U.S.-made capital goods rose more than expected in November. Other data on Thursday showed the economy grew faster than previously estimated in the third quarter, but the number of Americans applying for unemployment aid hit a six-month high last week and U.S. consumer spending increased modestly in November.
Spot gold was down 0.23 percent at $1,129.10 an ounce, while U.S. gold futures for February delivery settled at at $1,130.70 an ounce.
."Despite the current retreat in the dollar, traders have already positioned themselves for a neutral to lower end of the year for gold, with the next support level in the $1,123 area, as the focus remains on the hawkish message of the Fed, which signaled three rate increases in 2017," ActivTrades chief analyst Carlo Alberto de Casa said.
The dollar, which initially rose against a basket of currencies on the data, later gave up gains to trade 0.1 percent lower, while prices for U.S. government bonds slipped. The U.S. currency was however still trading less than a percent away from the 14-year high hit after the Federal Reserve raised U.S. interest rates last week for the first time in a year.
A more consistent evidence of strength of the U.S. economy could prompt the Fed to raise rates sooner rather than later, which would put pressure on gold prices. Higher rates lower demand for non-interest-paying bullion, which is priced in the U.S. currency.
Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, continued to fall on Wednesday, losing 0.4 percent to hit 824.54 tonnes. Holdings are down over 12 percent since November.
"Gold cannot seem to gain enough traction to trade noticeably higher. The heavy 300,000 ounces drop in the gold ETFs reported earlier in the week is still weighing on the market," HSBC said in a note.
"We sense support in the market between $1,120-$1,100 and... these levels will hold barring a significant U.S. dollar rally," it added.
Silver was up 0.3 percent to $15.98 an ounce. Platinum was down 0.4 percent at $910.90 and palladium fell for the seventh straight session, down 0.1 percent at $656.75.
The spread between platinum and palladium contracted sharply to its narrowest in nearly 15 years earlier this month at $141 an ounce, as a result of palladium's out performance. The autocatalyst metal has risen 16 percent this year, while platinum has gained 2 percent. The spread is currently at around $250, having averaged $465 over the last 30 years.