On Thursday gold declined though managed to hold above $1,200 an ounce, as the dollar weakened after disappointing economic data which raised doubts over the U.S. growth outlook.
The price was down 0.2 percent at $1,201.26 an ounce by 0935 GMT, having climbed 1.8 percent on Wednesday, the biggest single-day rally since Jan. 30. The move higher came after a 2.4-percent slide in all of March.
U.S. gold for June delivery slid $6.70 an ounce to $1,201.50.
On Wednesday a report indicated that U.S. manufacturing activity slowed last month while the U.S. private sector added fewer-than-expected jobs dampened expectations for higher interest rates. The Institute for Supply Management said its index of purchasing managers fell to a 14-month low of 51.5 in March from February’s 52.9.
Moreover, the latest ADP nonfarm payrolls report showed that the U.S. private sector added 189,000 jobs last month, below economists' expectations for jobs growth of 225,000 and the lowest since January 2014.
Weaker-than-expected data pressured the greenback, which was down 0.4 percent against a basket of main currencies, while boding well for safe-haven assets such as gold.
"The precious metal could face higher volatility as we approach towards the Friday's U.S. non farm payroll number," AvaTrade chief market analyst Naeem Aslam said. "(But) we may actually see a weak number, which could push the dollar lower."
"Having said that, we do need the gold price to stay above the $1,170 level in order for the uptrend to continue...if we do break (that) ...all (bullish) bets are off and we could be heading towards the $1,138 mark."
On Friday trading activity will be lower, when most U.S. markets will be closed for the Easter holiday, while some European markets will close Friday through Monday and reopening on Tuesday.
A weaker nonfarm report could push back expectations for a U.S. interest rate hike which some analysts predicted could come as early as June.
Any hike by the Fed, which has kept rates near zero since 2008 to stimulate the U.S. economy, could reduce demand for assets perceived as safer such as gold.
Spot silver fell 0.5 percent to $16.81 an ounce, while platinum lost 0.6 percent to $1,151.65 an ounce and palladium was unchanged at $743.98 an ounce.
