Gold has fallen after posting its biggest one-day gain in two weeks the day before, as hints of further stimulus from the European Central Bank hurt the euro and a rebound in global stocks curbed risk aversion.
Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the ECB's monetary policy, President Mario Draghi said after a meeting, holding out the prospect of further loosening.
Spot gold was down 0.1 per cent at $US1,099.70 an ounce at 3:13 pm EST (0713 Friday AEDT), after falling 0.8 per cent to $US1,092.15. It pared losses as the US dollar turned lower.
US gold futures for February delivery settled down 0.7 per cent at $US1,099.20 an ounce.
"After Wednesday's $US25 per ounce uptick in gold prices fuelled by the global equity market selloff, today gold was dragged lower by profit taking, recovering equity markets, and a stronger US dollar," said Giovanni Staunovo, commodities analyst at UBS Wealth Management in Zurich.
Oil prices and global equity markets rebounded, following a turbulent few days that wiped trillions of dollars off asset values, though it was unclear whether the vigorous selling action had come to an end.
"Draghi's dovish remarks seem to have improved risk sentiment somewhat - the yen is lower and gold also a touch lower," ABN Amro analyst Georgette Boele said.
"The market was cautious ahead of the meeting and he sounds dovish. That is negative for the euro."
The US dollar rose to its strongest against the euro in two weeks on Draghi's comments.
"You're not seeing so much safe haven bidding, although that is probably supporting the market," Societe Generale analyst Robin Bhar said.
"As the price inches higher, you're just losing steam from the physical markets. The physical buying is maybe not there to mop up any excesses, and for the moment gold appears to be struggling."
Physical gold demand in Asia slowed this week as prices rose, curbing seasonal buying in China ahead of a big holiday and forcing sellers in India to offer a discount.
Among other precious metals, platinum was up 0.05 per cent at $US818.40 an ounce, after falling to a seven-year low at $US806.31.
Palladium was up 0.9 per cent at $US497.30 an ounce and silver was down 0.4 per cent at $US14.11.
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