Gold, which has now fallen four out of the last five sessions, was pressured by disappointing mid-Atlantic factory activity and weak existing home sales, suggesting the economy was stuck in a slow-growth gear.
Both bullion and silver are set to end flat this week, as the dollar headed for its first drop in the last three weeks. The U.S. currency fell on Thursday after the previous session's gains as weaker U.S. economic outlook offset worries over euro due to Greece's uncertain debt situation.
"The stability in the dollar over the past few days has led to the trading range in the prices of gold and silver. I am not sure that the sell-off is over, but the market is possibly waiting for another event or more clarity," said Jeffrey Sherman, commodities portfolio manager of DoubleLine Capital, which manages more than $10 billion in assets.
Spot gold dropped 0.2 percent to $1,493.16 an ounce by 3:33 p.m. EDT (1933 GMT). U.S. gold futures for June delivery settled down $3.40 at $1,492.40, after trading in a range from $1,485.80 to $1,499.60.
Gold prices were down over 5 percent after setting a record of $1,575.79 an ounce on May 2.
On the options front, gold, silver and platinum options all rose to all-time highs on Wednesday, U.S. commodity exchange operator CME Group (CME.O) said, as volatility in precious metals futures spiked.
Trading volume was lower than usual for a second day, a sign that funds were less active participants following the recent sharp sell-off, reversing a trend of heavier activity during recent sell-offs.
Silver was last down 0.1 percent at $34.97 an ounce in choppy trade.
END OF QE2 IN SIGHT
Gold, stocks, bonds and the euro are expected to fall in the three months after the end of the Fed's second massive bond buying operation, also known as quantitative easing, or QE2, a Reuters poll of 64 analysts and fund managers found on Thursday. QE2 is scheduled to expire in June.
"The psychological impact of QE2 is more important than the action itself," said Jason Pride, director of investment strategy at Glenmede, with $19.8 billion under management.
Some market watchers also expect a third round of quantitative easing.
"I don't see how QE cannot go on in some form because who's going to be left to buy the Treasury debt if not the Fed. It's hard to believe that the Fed would just shut down," said Leo Larkin, metals equity analyst at Standard & Poor's.
Bullion was up 20 percent since August when Fed Chairman Ben Bernanke's speech at Jackson Hole, Wyoming marked the beginning of QE2.
ETF WEAK, PHYSICAL COIN DEMAND SOARS
Interest in gold investment products such as bullion-backed exchange-traded funds remained soft, with holdings of the world's largest, New York's SPDR Gold Trust, declining by nearly 30,000 ounces on Wednesday.
Holdings of the largest silver ETF, the iShares Silver Trust, declined by 1.3 million ounces, the fund said on Wednesday. Its holdings rose strongly throughout last year, but silver's recent dive of more than 30 percent has been accompanied by outflows.
Industry-sponsored trade group World Gold Council said in a report that gold coin and bar investment rose in most geographical areas in the first quarter, more than doubling in China to 90.9 tonnes, rising 54 percent in the United States to 22.5 tonnes and almost doubling in Europe to 78.1 tonnes.
Central banks were also major gold buyers, adding 129.3 tonnes to their holdings, up from 58.8 tonnes in the first quarter of last year, WGC said. Until recent years, central banks were net suppliers of gold to the market.
Platinum group metals have firmed this week during London's Platinum Week, as miners, recyclers, traders, analysts and end-users gathered for the launch of an industry report bullish on palladium by PGM refiner and specialist company Johnson Matthey.
Platinum slipped 66 cents to $1,762.74 an ounce, and palladium was down 0.3 percent at $726.50.
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