Gold fell early on Thursday after the European Central Bank and the Bank of England did not hint at more economic stimulus, and as encouraging US jobless claims data fuelled optimism about the upcoming nonfarm payrolls report. The metal's 0.5 percent decline snapped a two-day winning streak, marking its biggest daily decline in a week. Bullion dropped after the ECB gave no clear hints of further monetary easing and the BOE decided not to restart its gilt purchases plan.
The gold market now turns its focus to Friday's all-important US nonfarm payrolls report for February. Signs of continuing recovery in the job market could prompt the Federal Reserve to halt its economic stimulus earlier than thought. "Gold is under pressure as the overall numbers have started to pick up in the economy. If we see job growth on Friday, the metal may continue to weaken," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
Spot gold was down 0.5 percent at $1,575.44 an ounce by 2:34 pm EST (1934 GMT). US gold futures for April delivery settled up 20 cents at $1,575.10, with trading volume about 10 percent below average, preliminary Reuters data showed. Gold's safe-haven status was also dented after the US House of Representatives passed a bill to avert a possible government shutdown for now.
Silver dropped 0.9 percent to $28.76 an ounce. Underpinning gold prices were hopes that recent sharp outflows from gold-backed exchange-traded funds appeared to have bottomed out. Holdings of SPDR Gold Trust, the world's largest gold ETF, stood unchanged on Wednesday after 11 straight sessions of losses. Investors pulled $5.6 billion from gold exchange-traded products (ETPs) in February after a poor performance by the yellow metal, but appetite for riskier, growth-oriented industrial metals ETPs remained intact.
In the physical market, buyers in China slowed their robust purchases of gold as purchases made in previous weeks started to arrive, easing a supply shortage. China's domestic gold prices had been trading at premiums of over $20 above international prices in the past few days, but that spread shrank to just over $10 on Thursday, and traders said the premiums could fall further. In platinum group metals, platinum was up 0.3 percent at $1,589.74 an ounce and palladium climbed 1.5 percent to $755.47.
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