Gold fell early on Thursday as the dollar cut losses on US data that showed growing economic momentum, but support came from signs the Federal Reserve was unlikely to raise interest rates in June. The number of Americans filing new claims for unemployment benefits rose slightly more than expected last week, data on Thursday showed. But the four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 5,500 last week to 266,250. That was the lowest level since April 2000.
Spot gold was down 0.3 percent at $1,205.28 an ounce by 2:43 pm EDT (1843 GMT), while US gold futures for June delivery settled down 0.4 percent at $1,204.10 an ounce. "We had a good run-up and every rally is seen as an opportunity to take profits" in the last 18 months, Ross Norman, chief executive of broker Sharps Pixley, said. "The market remains elastic, (with) good buying on the dips and selling on the rallies." Minutes of the Fed's April meeting, released on Wednesday, showed policymakers believed it would be premature to raise interest rates in June.
That view was widely held in the market following disappointing US economic data over the past few weeks that weighed on the dollar, in turn helping gold hit a three-month high of $1,232.20 on May 14. Higher US interest rates would increase the opportunity cost of holding non-yielding bullion. The market awaited a speech on Friday by Fed Chair Janet Yellen.
Gold prices have struggled to break out of a $1,170-$1,230 an ounce range since mid-March, hamstrung by uncertainty over the timing of a US rate rise. However, investor sentiment has turned bearish in recent days as prices have fallen from the three-month highs reached earlier this week. Outflows in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, continue to undermine investor sentiment. Holdings of the fund fell 0.41 percent to 715.26 tonnes on Wednesday, the lowest in four months. Silver was up 0.2 percent at $17.12 an ounce, while platinum was down 0.3 percent at $1,150.58 an ounce. "We believe that platinum and palladium markets will be significantly tighter than the consensus currently anticipates in 2015," said Capital Economics in a note. Palladium rose 0.8 percent to $778.22 an ounce.