Gold prices retreated from one-year highs on Thursday as the dollar regained some ground, while investors awaited the US non-farm payrolls report to gauge the Federal Reserve's monetary policy strategy.
Spot gold fell 0.4% to $2,013.13 per ounce by 0701 GMT, after hitting its highest since March 2022 on Wednesday. US gold futures dipped 0.2% to $2,030.70.
The dollar index edged 0.1% higher, making bullion expensive for overseas buyers, Reuters said.
"This is a market due for some technical correction because the rally was very sharp," said Ajay Kedia, director at Kedia Commodities in Mumbai.
The economic data points this week were major components supporting gold prices, he added, while also noting some profit-booking ahead of the Good Friday holiday.
Bullion has gained about 2.3% so far this week, after a surprise oil output cut by OPEC+ and weak US economic data over the week added to fears of an economic slowdown and sent the yellow metal soaring above $2,000.
Wednesday's data showed the US services sector slowed more than expected in March. Separate data showed private sector job adds fell well short of expectations.
Investors now await Friday's non-farm payrolls report for March.
While gold is traditionally considered a hedge against inflation and economic uncertainties, higher interest rates dim non-yielding bullion's appeal.
Markets see a 59% chance of the Fed standing pat on interest rates in May, according to CME's FedWatch tool. Cleveland Federal Reserve Bank President Loretta Mester said it was too early to know if the Fed would need to raise interest rates at its May policy meeting.
"The gold trade is getting a bit overcrowded but the macro backdrop still strongly remains firmly in its favor," Edward Moya, a senior market analyst at OANDA, said in a note, adding that gold's immediate resistance is at the $2,050 level. Spot silver fell 0.6% to $24.82 per ounce, platinum gained 0.8% to $1,005.01, while palladium edged 0.1% lower to $1,427.74.
