Gold traded little changed on Thursday, unable to break above a key resistance at $1,585 an ounce, as data showing signs of improvement in the US job market bolstered hopes for growth and weighed on safe-haven demand.
US private employers hired more workers than expected in February and demand for a range of factory goods was solid in January, hopeful signs for the economy as it deals with higher taxes and deep government budget cuts.
Economists expect Friday's employment report will show only moderate job growth in February, which would argue for onging monetary support. But investors were less enthusiastic about gold - a hedge against loose monetary policy - than riskier assets such as equities as confidence in economic recovery grew.
"As risk appetite rises, investors have left gold in the cold recently," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
Gold is likely to bounce in a range between $1,550 and $1,590 an ounce in the near future, Chen added.
The yield on 10-year US Treasuries traded near Wednesday's peak, its highest level in more than a week, as investors moved out of safe-haven assets to seek better returns.
Spot gold was little changed at $1,583.51 an ounce by 0345 GMT.
US gold gained half a percent to $1,583.10.
Technical analysis suggested spot gold looks neutral in a range of $1,564 and $1,589 an ounce, and only an escape could point to a future direction, said Reuters market analyst Wang Tao.
Investors are waiting for the outcomes of policy meetings of European Central Bank and Bank of England later in the day, after the Bank of Japan kept its policy on hold as expected.
More aggressive monetary easing would support the sentiment in gold, although that would weaken currencies of those economies and strengthen the dollar, which in turn would weigh on sentiment in gold by making it more expensive for buyers holding other currencies.
The spread between Shanghai and spot gold prices narrowed from about $20 an ounce over the past few days to around $15 an ounce. The high premium in Shanghai prices had encouraged Chinese banks to buy on the international market and bring the metal onshore.
"There is metal on the way (to China) so more banks are selling the spread," said a Hong Kong-based trader.
The popular gold forward contract on the Shanghai Gold Exchange dropped to a two-week low of 317.5 yuan a gram, or $1,587 an ounce, before paring losses to 319 yuan.
In other news, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, was unchanged on March 6 at 1,244.855 tonnes, after dropping for an unprecedented eleven straight sessions. A halt in rapid outflows could help stabilise gold prices.