Gold prices fell over 1 percent on Thursday and the dollar hit a fresh two-month high as solid ADP private payrolls data released overnight triggered hopes of a labor market recovery in the world's largest economy and the House's approval of a budget resolution cleared the path for the Covid-19 relief plan.
Spot gold fell 1.2 percent to $1,812.09 per ounce, while U.S. gold futures were down 1.2 percent at $1,812.65.
Payroll processor ADP released a report on Wednesday showing a much stronger than expected rebound in private sector employment in the month of January.
ADP said private sector employment jumped by 174,000 jobs in January after decreasing by a revised 78,000 jobs in December.
Economists had expected employment to rise by 49,000 jobs compared to the loss of 123,000 jobs originally reported for the previous month.
A separate report released by the Institute for Supply Management showed U.S. service sector activity unexpectedly grew at an accelerated rate in the month of January.
The ISM said its services PMI inched up to 58.7 in January from a revised 57.7 in December. The uptick came as surprise to economists, who had expected the index to edge down to 56.8 from the 57.2 originally reported for the previous month.
Meanwhile, the U.S. House of Representatives passed the budget resolution in a 218-212 vote on Wednesday, with the Senate vote scheduled later this week.
After the passage in both chambers, Democrats will start crafting a budget reconciliation bill, which would allow them to push stimulus legislation.
Investors remain hopeful after Democrats pushed ahead with a maneuver to pass U.S. President Joe Biden's $1.9 trillion Covid-19 relief package without Republican support.