NEW YORK: Gold fell on Wednesday as upwardly revised figures for US economic growth triggered profit-taking in the precious metal after its recent rally on speculation of new stimulus from the Federal Reserve.

The metal came under pressure after data showed the US economy fared slightly better in the second quarter than initially thought. The pace of growth, however, remained too slow to shut the door on a possible third round of US bond-buyback, known as quantitative easing, analysts said.

Despite Wednesday's drop, gold has gained 3 per cent in the last seven sessions, on market expectations Fed Chairman Ben Bernanke could use his speech at Friday's annual symposium of central bankers and finance ministers in Jackson Hole, Wyoming,  to send a strong message to markets.

Last week, gold broke above the upper end of a four-month trading range to over $1,640 an ounce, after the minutes of the Fed's latest policy meeting revealed the US central bank intended to adopt gold-friendly stimulus soon unless economic conditions improve dramatically.

“A Jackson Hole premium may certainly be priced in gold,” said Carlos Perez-Santalla, precious metals trader at PVM Futures.

Spot gold was down 0.5 per cent at $1,658.11 an ounce by 2:47 pm, its biggest one-day drop in two weeks.

US gold futures for December delivery settled down $6.70 an ounce at $1,663. Trading volume was 30 per cent below its 30-day average, preliminary Reuters data showed.

Commerzbank analyst Daniel Briesemann said that he expected Bernanke's Friday speech might temporarily disappoint gold markets, but strong performance of gold exchange-traded funds and buying by central banks suggested a momentary price dip could be a buying opportunity.

In addition, investors expect the European Central Bank to soon unveil an effective plan to tackle the high borrowing costs facing struggling euro zone nations such as Spain.

Any efforts by central banks to print money to boost growth should benefit gold, a traditional inflation hedge.

SPDR GOLD TRUST REPORTS INFLOW

Investment interest in gold remained elevated, with the world's largest gold exchange-traded fund SPDR Gold Trust recorded an inflow of more than 3 tonnes on Tuesday. That brought its rise for the month to nearly 38 tonnes, its biggest one-month inflow since November.

Among other precious metals, silver eased 0.3 per cent to $30.75 an ounce, while spot palladium was down 0.3 per cent at $633.25 an ounce.

Platinum edged up 0.3 per cent to $1,515.99 an ounce, underpinned by supply worries amid unrest in the South African mining sector, after violence at Lonmin's Marikana platinum mine killed 44 earlier this month.