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Gold retreated for a third straight session on Thursday on a stronger dollar after Federal Reserve officials kept alive expectations for an increase in interest rates sometime this year despite recent weak economic data.
New York Fed President William Dudley and Fed Governor Jerome Powell on Wednesday sketched out scenarios in which the central bank could make an initial move earlier than many now expect and then proceed in a slow and gradual manner on further rate increases.
Also, minutes from the Fed's March 17-18 meeting showed that officials had opened the door to a June rate rise, while "several participants" went on record saying they expected upcoming economic data would warrant an initial rate increase that month.
Spot gold fell back below the $1,200 an ounce after the Fed's minutes and the comments from officials and was trading down 0.5 percent at $1,196.30 an ounce at 0942 GMT.
US gold for June delivery dropped 0.6 percent to $1,196.00 an ounce.
The metal retreated 2.3 per cent from a seven-week high of $1,224.10 hit on Monday, after disappointing U.S. jobs data raised expectations the Fed would delay a rate rise.
Any rise by the Fed, which has kept rates near zero since 2008 to stimulate the U.S. economy, could reduce demand for non-interest-yielding assets such as gold.
"(The Fed) reinforced the end of forward guidance and a majority of members are looking for rate increases later in 2015," Deutsche Boerse's MNI senior analyst Tony Walters said.
"(Wider) markets seem to be getting more comfortable with rate increases or with the thought/potential of one... and obviously metals should struggle in that environment."
The dollar traded at one-week highs against a basket of major currencies, up 0.5 percent, as investors renewed bets on a 2014 rate increase.
Gold demand from top gold consumer India appeared stronger, while buying from No. 2 consumer China remained weak with premium on physical gold at the Shanghai Gold Exchange at about a dollar over the global spot benchmark after flipping to a small discount earlier.
"Physical buying may not be sufficiently powerful to push prices higher near term," HSBC said in a note.
Spot silver fell 1.2 per cent to $16.26 an ounce, while platinum lost 0.6 per cent to $1,159 an ounce and palladium was down 0.1 per cent at $755.85 an ounce.
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