Gold prices retreated from a 4-1/2-month high on Thursday, hurt by an uptick in the U.S. dollar and bond yields, while investors awaited key economic readings out of the United States this week.
Spot gold was down 0.1% at $1,894.88 per ounce by 0235 GMT, after hitting its highest since Jan.8 at $1,912.50 on Wednesday.
U.S. gold futures declined 0.3% to $1,898 per ounce.
"Gold prices reversed back in parallel with the rebounding U.S. dollar. What this suggests is that we are starting to see markets positioning ahead of Friday`s PCE report," DailyFX currency strategist Ilya Spivak said.
The dollar index rose to a one-week high against rivals, making gold more expensive for other currency holders. [USD/]
Benchmark U.S. Treasury yields rose to 1.58%, increasing the opportunity cost of holding non-interest bearing gold. [US/]
Market participants now await the monthly U.S. personal consumption report due on Friday to gauge inflationary pressure. U.S. gross domestic product, jobless claims data are due later on Thursday.
Federal Reserve officials have recently downplayed rising price pressures and affirmed their support to keep monetary policy accommodative for some time.
"There are concerns that inflation will not be temporary and the Fed will be forced to begin to taper stimulus much sooner than they currently expect," Spivak said.
On Wednesday, Fed vice chair for supervision Randal Quarles said he was prepared to open talks on reducing the central bank`s emergency support measures, only to also stress the need to remain patient.
Meanwhile, South Korea`s central bank kept monetary policy unchanged on Thursday but upgraded its economic outlook as exports and inflation perked up.
Elsewhere, palladium fell 0.4% to $2,734.57 per ounce, silver slipped 0.5% to $27.56 and platinum dipped 0.4% to $1,185.99.
