NEW YORK: Gold fell for a third straight session on Thursday, hitting a 10-month low as unprecedented monetary stimulus from the Bank of Japan and hopes for another European Central Bank rate cut failed to stem heavy selling of bullion by funds.
Palladium dropped around 3 percent, dragged down by a commodities selloff led by crude oil as a four-month high in US initial jobless claims dented demand hopes.
Data showed investors pulled more money out of gold exchange-traded funds. Bullion is now testing long-term chart support around $1,525 an ounce, and analysts warned of further losses if it breaks below that mark.
"We have a lot of liquidation of the gold ETFs and the short position on the Comex for gold remains very high, so a lot of the macro hedge fund selling has put pressure on gold," said Howard Wen, metals analyst at HSBC.
Spot gold earlier fell as low as $1,539.74 an ounce, its weakest point since May 30. It was last down 0.2 percent at $1,554.60 by 3:30 p.m. EDT (1930 GMT).
US Comex gold for June delivery settled down $1.10 at $1,552.40, with volume about 5 percent below its 30-day average, preliminary Reuters data showed.
The gold market largely shrugged off news that the BOJ had promised to inject about $1.4 trillion into the Japanese economy in less than two years, and a pledge by the ECB that it was "ready to act" if necessary.
Investors will look toward Friday's US employment data for more signals on the strength of that economy. A strong report could cause gold to fall further, analysts said, because it might make it easier for the US Federal Reserve to end stimulus measures that have made some investors leery of possible inflation in the world's biggest economy.
Analysts expect Friday's report to show American employers hired at a moderate pace in March, suggesting the economy was gathering momentum.
"If the nonfarm payroll turns out to be a very strong number, there might be room for gold to fall," Wen said.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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