London - Gold fell on Thursday as the dollar rose to a 9-year high versus the euro and stock markets climbed more than 2 percent, with minutes from the Federal Reserve's last meeting and steadier oil prices soothing risk aversion.
Spot gold was down 0.4 percent at $1205.60 an ounce at 1235 GMT, while US gold futures for February delivery were down $4.80 an ounce at $1,205.90.
European shares rose 2.1 percent after minutes from the Federal Reserve's latest policy meeting on Wednesday reassured markets that it was in no hurry to raise interest rates.
Analysts said the minutes held few surprises, with the Fed signalling it would press ahead with plans to begin raising interest rates later this year, but would be “patient” in deciding when the move would come.
A steadier tone to oil prices after recent sharp losses also soothed investors' nerves, helping lift US and European government bond yields off recent lows.
Among currencies, the dollar hit a 9-year high against the euro, as investors ramped up bets the European Central Bank was getting closer to loosening monetary policy to ward off deflation.
“It's not surprising we're seeing gold under a little bit of pressure. We're seeing equity markets rebound, and at the same time the US dollar is stronger,” Commerzbank analyst Eugen Weinberg said. “Gold is very dependent on external factors.”
Weakness in the euro lifted gold priced in the single currency 0.2 percent to 1024.91 euros an ounce. On Wednesday it hit a 15-1/2 month high at 1029.81 euros an ounce.
Spot gold climbed to a three-week high of $1222.40 earlier this week as global equities fell on concern over political developments in Greece that could see it leaving the euro zone.
EQUITIES STRONGER
But equities have regained some strength due to better US data and a halt, for now, to the slide in oil prices.
Analysts are awaiting the release of US non-farm payrolls data for December on Friday, a key barometer of the health of the US economy. An upbeat report is likely to support the view that the Fed will raise rates sooner rather than later.
In a reflection of investor sentiment, the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, reported another 3-tonne outflow on Wednesday, bringing its holdings to their lowest since late 2008 at 704.83 tonnes.
Demand was muted in major consumer China overnight compared to recent days, dealers said.
Among other precious metals, silver was down 0.9 percent at $16.34 an ounce, while platinum was up 0.1 percent at $1,215 an ounce and palladium was down 0.6 percent at $783 an ounce.
Reuters