Gold edged lower on Thursday as the dollar traded within reach of an almost 14-year high hit on positive U.S. economic data, which increased expectations of the Federal Reserve increasing interest rates in December.
Fed policymakers appeared confident on the eve of the U.S. presidential election that the economy was strengthening enough to warrant rate increases soon, minutes from the central bank's Nov. 1-2 meeting showed.
Spot gold was down 0.2 percent at $1,185.45 an ounce by 1300 GMT. It dropped 2 percent in the previous session and touched its lowest since Feb. 8 at $1,180.99 overnight.
U.S. gold futures eased by 0.1 percent to $1,188.10.
With U.S. markets closed for the Thanksgiving holiday, trade is expected to thin down later in the day.
Spot prices have dropped nearly 12 percent from a high of $1,337.40 on Nov. 9, when Donald Trump was announced U.S. president-elect.
"The expectation that Trump's election would lead to a longer risk-off period in financial markets was soon overtaken by the perception that he would be able to boost growth and that inflation would be accompanied by rising interest rates, which raised a bearish scenario for gold," said Julius Baer analyst Carsten Menke.
"At least in the short term there is some consolidation due in the dollar and U.S. Treasury yields, and this is something that should provide gold (with) some support," he added. "Still, the big risk would be continued selling of investor physical holdings."
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.47 percent from the previous day to 891.57 tonnes on Wednesday. Holdings have declined by more than 5 percent this month.
The dollar index rose to its highest in nearly 14 years, boosted by data showing new orders for U.S. manufactured capital goods rebounded in October, before retreating slightly.
Recent positive U.S. economic data has helped to boost the dollar, pressuring gold prices as investors raise bets on an interest rate hike that would increase the opportunity cost of holding non-yielding bullion.
Investors are now pricing in a nearly 100 percent probability of a December U.S. rate increase, according to CME FedWatch, and some investors expect further hikes in 2017.
In other news, top consumer China's net gold imports via main conduit Hong Kong rose 15.8 percent in October to the highest in three months, data showed on Thursday.
Spot silver dropped 0.3 percent to $16.30 an ounce after falling to its lowest since June in the previous session. Platinum was down 1.5 percent at $913.80, having earlier hit a 9-1/2 month low, while palladium slipped by 0.2 percent to $731.50.