Monetary stimulus programs, such as the Fed's monthly asset purchases totaling USD85 billion, drive down longer-term interest rates to spur recovery, which weakens the dollar and makes gold an attractive hedge.
Talk of an eventual end to stimulus tends to strengthen the dollar, which often comes at gold's expense.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,311.15 during U.S. afternoon hours, down 0.14%.
The December contract settled down 0.89% at USD1,313.00 a troy ounce on Wednesday.
Gold futures were likely to find support at USD1,306.05 a troy ounce, Wednesday's low, and resistance at USD1,339.15, Wednesday's high.
In the U.S. earlier, the Institute of Supply Management said its widely-watched purchasing managers index rose to 55.4 in July from 50.9 in June, expanding at its fastest rate since April 2011 and well above market forecasts for a 52.0 reading.
The numbers strengthened the greenback by keeping expectations alive that the Federal Reserve remains on track to winding down stimulus measures beginning this year and ending them next year and let the economy stand on its own two feet.
Better-than-expected data out of the labor market also fueled such sentiments.
The Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 26 fell by 19,000 to 326,000.
Analysts were expecting jobless claims to come in at 345,000.
Meanwhile, gold did see some support after ECB President Mario Draghi said that the central bank’s monetary policy will remain accommodative "for an extended period of time."
The ECB held its benchmark interest rate at a record low 0.50% in August, in line with expectations, which made gold attractive in the eyes of those concerned with the single currency's strength.
Elsewhere on the Comex, silver for September delivery was down 0.08% at USD19.612 a troy ounce, while copper for September delivery was up 1.57% and trading at USD3.168 a pound.
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