LONDON: Gold edged lower on Thursday, hovering close to a one-week low hit in the last session, with its appeal dented by continued optimism for a vaccine-led boost to a global economic recovery. Spot gold fell 0.2% to $1,836.40 per ounce by 1236 GMT, after falling as much as 2.5% on Wednesday. US gold futures were up 0.2% to $1,841.
"Gold is likely to see a bit of retracement as there's not much safe haven demand in the near term," said Bank of China International analyst Xiao Fu.
"Nevertheless, there could still be fluctuations in the market as the coronavirus situation in the USA and Europe are still quite severe."
Global stocks held steady, caught between optimism over the rollout of Covid-19 vaccines in Britain and Canada and worries surrounding surging cases, especially in the United States.
The European Central Bank (ECB) unveiled fresh monetary policy decisions.
"Practically anything that they do is likely to be positive for gold," said StoneX analyst Rhona O'Connell.
"(ECB President Christine Lagarde) is bound to keep the policy as accommodative as possible, which means that we're looking at negative interest rates for quite a long time yet, and she'll probably be pushing for fiscal stimulus."
Trading will also be muted by thinning liquidity going into the Christmas holidays, O'Connell said.
Gold benefits from its appeal as a hedge against inflation that could result from the unprecedented stimulus unleashed in 2020.
Investors also awaited US weekly jobless claims data, due at 1330 GMT.
Among other precious metals, silver fell 0.4% to $23.83 per ounce and platinum rose 0.7% to $1,008.08.
Palladium gained 1.5% to $2,299.51.
"Demand will likely rebound next year as a result of improving car sales and higher loadings of palladium in catalytic converters due to tighter emission standards," said UBS analyst Giovanni Staunovo in a note.
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