Gold fell on Thursday, weighed down by a stronger dollar and an uptick in equities, as investors awaited cues on the health of the economy from European Central Bank chief Mario Draghi's statement later in the day. Spot gold slipped 0.3 percent to $1,278.43 an ounce at 1323 GMT. US gold futures were down 0.5 percent at $1,277.60.
"I think the market doesn't believe, at least yet, that there's a case for gold to go above $1,300 ... The dollar is still relatively strong," said Philip Newman, director at Metals Focus. Gold still faces short-term headwinds, Newman said, adding that the metal is only one of the beneficiaries of renewed interest for safe havens from market volatility.
A stronger US dollar, another refuge for investors, makes gold more expensive for holders of other currencies. The dollar index was up 0.3 percent against a basket of currencies on Thursday. Meanwhile European shares firmed, helped by gains in technology stocks.
The ECB left euro zone interest rates firmly in sub-zero territory but investors were waiting to see how much concern Draghi shows at his 1330 GMT news conference after a blizzard of glum data. "The macro-economic backdrop is more positive for gold, which we think will continue to benefit from safe-haven demand this year," analysts at Capital Economics said in a note, and forecast gold prices at $1,350 by end-2019.
"Investor inflows look set to continue given our expectation of further falls in global equity markets and slower economic growth." Gold prices have gained more than 10 percent since touching 1-1/2-year lows in mid-August, mainly because of dampened risk sentiment amid fears of a global slowdown, expectations of a pause in US interest rate hikes and a prolonged government shutdown in the United States.
White House economic adviser Kevin Hassett said in a CNN interview that the US economy could register zero growth in the first three months if the partial government shutdown lasts the whole quarter. Spot gold could retest support at $1,278 an ounce, a break below which could cause a loss to the next support at $1,266, said Reuters analyst Wang Tao.
Among other metals, palladium, which hit a record high of $1,434.50 an ounce last week on low inventories and rising demand, was down 0.6 percent at $1,339 per ounce. Silver was 0.4 percent lower at $15.30 per ounce and platinum slipped 0.8 percent to $787.34.
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