Gold fell on Thursday as the euro dropped against the dollar after the European Central Bank kept interest rates on hold and pledged to use unconventional measures to combat low inflation.
Bullion came under pressure after the ECB opened the door to turning on its money printing presses to boost the euro zone economy and keep inflation from staying too low.
Encouraging U.S. economic data including Wednesday's U.S. private-sector hiring data and expectations of a strong U.S. nonfarm payrolls report on Friday lessened the metal's appeal as a hedge against economic uncertainty.
The metal has fallen in three out of the past four sessions.
"Recent conversations with market participants reveal that the general sentiment towards gold is quite subdued right now," said Edel Tully, precious metals strategist at UBS. "There are no strong convictions out there."
Spot gold fell 0.5 percent to $1,282.70 an ounce by 2:06 p.m. EDT (1806 GMT), near a seven-week low of $1,277.29 on Tuesday.
U.S. COMEX gold futures for April delivery settled down $6.20 at $1,284.60 an ounce.
Turnover was sharply lower than usual, with trading volume about 50 percent lower than the 30-day average, preliminary Reuters data showed.
The biggest event for the market is Friday's payrolls for March, which is expected to show that the tepid performance of the previous two months resulted from extreme winter weather.
"A stronger U.S. jobs number tomorrow will be seen as the final sign that previous weakness in the data was down to bad weather and that the economy is on the recovery path," MKS SA head of trading Afshin Nabavi said.
Improving investment demand, reflected by recent inflows into the gold exchange-traded funds, also underpinned bullion prices. Holdings in the world's biggest gold ETFs monitored by Reuters inched up as of Wednesday.
Among other precious metals, silver fell 0.8 percent to $19.78 an ounce.
Platinum group metals drew some support from South African producer Lonmin's force majeure with some suppliers. The action echoed announcements made by rivals Impala Platinum and Anglo American Platinum as a miners' strike is close to entering its 11th week.
Platinum climbed 0.4 percent to $1,438 an ounce and palladium gained 0.4 percent to $785.25 an ounce.