Investing.com - Gold futures stayed near a three-month high in Europe trade on Thursday, amid growing skepticism over the Federal Reserve's ability to raise interest rates as much as it would like this year.
Gold for April delivery on the Comex division of the New York Mercantile Exchange ticked up $1.20, or 0.11%, to trade at $1,142.50 a troy ounce by 08:00GMT, or 3:00AM ET.
A day earlier, gold rallied to $1,146.20, the most since October 30, before ending at $1,141.30, up $14.10, or 1.25%, marking its best day in two weeks.
Wednesday’s gains came as the U.S. dollar tumbled to a three-month low after New York Fed President William Dudley said financial conditions have tightened considerably and the weakening global outlook could have "significant consequences" to the U.S. economy.
The dovish comments tempered expectations on the timing of future U.S. interest rate increases.
Data showing that service sector activity in the U.S. grew at the slowest pace in almost two years in January further cooled expectations for a March rate hike.
Market participants are anticipating just one more rate hike this year, compared with four according to Fed policymakers' guidance. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Prices of the precious metal are up almost 8% so far this year as retreating oil prices and losses in global equity markets underpinned demand for assets perceived as safer. Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Investors looked ahead to key U.S. data later in the day to gauge the strength of the world's largest economy.
The U.S. is to release the weekly report on initial jobless claims at 8:30AM ET, as well as data on nonfarm productivity followed by factory orders data at 15:00GMT, or 10:00AM ET.
Market players are also focusing on Friday's U.S. nonfarm payrolls report. The consensus forecast is that the data will show jobs growth of 190,000 last month, following an increase of 292,000 in December, while the unemployment rate is forecast to hold steady at 5.0%.