Gold prices hovered on Thursday below the previous session's one-week high, as the US dollar regained ground ahead of central bank meetings in Britain and Europe as their economies grapple with broadening inflationary risks.
Spot gold eased 0.2% to $1,803 an ounce, as of 0753 GMT, after hitting $1,810.86 in the previous session, its highest since Jan. 27. US gold futures fell 0.3% to $1,804.90.
"Rate expectations are the primary driver of gold right now," said IG Markets analyst Kyle Rodda.
Gold nudged off $1,800 level as improved risk appetite counters lower yields
"There's been some reprieve for gold in recent days from some comments from a handful of Fed speakers, who have hosed down some fears of aggressive tightening."
While the US Federal Reserve is expected to hike interest rates in March, policymakers spoke cautiously this week about what might follow, given an uncertain outlook for inflation, as the pandemic hits business activity.
Gold is considered a hedge against inflation, but it could see demand take a hit from higher rates as a non-interest-paying asset.
"Elevated inflation is pushing real rates further into negative territory, this broadly protects the downside for gold in the short term," ANZ wrote in a note.
Markets expect the Bank of England to raise interest rates again and signal further unwinding of its pandemic stimulus later in the day, while the European Central Bank is set to keep policy unchanged but acknowledge surging inflation.
The dollar index firmed against its rivals, curbing demand for the greenback-priced bullion among buyers holding other currencies.
"There is presently a very high correlation between the US dollar movement and gold price direction with little else influencing prices over the last few trading sessions," said Michael Langford, director at corporate advisory AirGuide, who expects gold to keep treading water around $1,800 an ounce.
Elsewhere, silver slipped 0.5% to $22.51, platinum was down 0.2% at $1,030.52 and palladium added 0.2% to $2,374.15.
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