The metal managed to stabilize around a support at $1,862, the 38.2% projection level of an upward wave c from $1,862. This wave may have completed around $1,904.
Underscoring the economic hit from the pandemic, data on Wednesday showed elevated US jobless claims and a drop in consumer spending for the first time since May in November.
"Heightened inflation expectations due to the US fiscal stimulus package have seen gold pick up as an inflation hedge," said Howie Lee, an economist at OCBC Bank.
U.S. Congressional lawmakers scrambled to pass a coronavirus aid package on Thursday with both parties saying that failure to reach an agreement was no longer an option.
A break above the $1,892 area with support from a dovish U.S Federal Reserve and a weaker dollar could signal further upside with resistance at $1,910 ahead, Yang said.
US Congressional Republicans and Democrats scrambled to pass a new round of coronavirus aid on Thursday with lawmakers from both parties saying that failure to agree was no longer an option.
Britain and the European Union have moved closer to sealing a new trade deal but it was still unclear if they would succeed, the bloc's chief executive said on Wednesday.
The US Federal Reserve is expected to keep interest rates pinned near zero and to signal where rates are headed in the coming years at it's final policy meet of the year. The Fed's policy statement is due at 1900 GMT.
But gold's losses were limited by hopes of further US fiscal stimulus, with Reuters reporting that a $908 billion relief plan will be split in two in an effort to win approval and could be introduced as early as Monday.