LONDON: Gold prices fell on Thursday, snapping three days of gains, as European stocks rallied and the dollar strengthened ahead of key US economic data.

Prices remain under pressure in the longer term from expectations for a Federal Reserve rate hike this year, the first in nearly a decade. Rising US rates lift the opportunity cost of holding non-yielding gold, and benefit the dollar.

Spot gold was down 0.5 per cent at $1,180.60 an ounce at 0932 GMT, while US gold futures for August delivery were down $6.50 an ounce at $1,180.10.

The metal hit a one-week high of $1,192.10 on Wednesday. It has held largely in a $50 range around $1,200 an ounce since mid-March.

“The rally of the last couple of days has been sold into today, and that has put us back into an even tighter range of $1,180-1,190,” said Mitsubishi analyst Jonathan Butler.

“Expectations of what the Fed is going to say next week will probably be driving some positioning early next week.” Gold is suffering from a stronger dollar, which rallied 0.5 per cent against a basket of currencies ahead of US retail sales data later in the day, which are expected to be strong.

“We have US retail sales, and PPI data is out tomorrow,” Butler said. “As long as there are no downside surprises, gold is probably going to remain in that range.” Strong numbers could push prices lower, he said, but the $1,150 level is likely to hold. “We would need to see some pretty impressive data to break that,” he said.

Bets that the United States could be edging towards its first interest rate rise kept upward pressure on global bond yields and the dollar, which was also lifted by a weak euro.

European shares saw fresh gains on Thursday after their best day in over a month, helped by expectations that Greece could be close to sealing a deal with its creditors.

Gold prices also faced pressure from outflows from gold-backed exchange-traded funds.

The world’s biggest gold ETF, SPDR Gold Trust, said its holdings fell 0.2 per cent to 704.23 tonnes on Wednesday, the lowest since September 2008.

Silver was down 0.9 per cent at $15.83 an ounce, while platinum was down 0.7 per cent at $1,103.05 an ounce and palladium was down 0.5 per cent at $738.15 an ounce.

Palladium earlier touched its lowest since April 1 at $736.00 an ounce.