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Gold prices hovered near a one-week low on Thursday, pressured by a firmer U.S. dollar and higher bond yields following strong business activity data, while investors awaited U.S. GDP numbers and the European Central Bank's policy meeting later in the day.

Spot gold rose 0.2% to $2,015.83 per ounce by 0424 GMT. U.S. gold futures were unchanged at $2,015.80.

Bullion hit its lowest level in nearly a week on Wednesday after data suggested that the U.S. economy kicked off 2024 on a strong note, with business activity picking up in January and inflation appearing to abate.

"The U.S. economy keeps defying the doom and gloom and that's allowed the markets to price out policy easing and the risk of a recession," said Kyle Rodda, a financial market analyst at Capital.com.

The dollar index rose 0.1% to hover near a six-week high, making greenback-priced gold less attractive to other currency holders, while yields on benchmark U.S. 10-year Treasury notes were not far from a more than one-month high of 4.1980% touched last week.

Given that there's still a chance of March rate cut implied in money markets, strong data over the next few weeks and a likely push back from the Fed at the end of its January policy meeting will make gold vulnerable to further downside, said Rodda.

Markets are currently pricing in a 43% chance of a Fed rate cut in March. However, those expectations largely have been deferred to May with an 88% probability of policy easing, according to LSEG's interest rate probability app IRPR. [FEDWATCH]

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

Investors are now awaiting the first reading of fourth-quarter U.S. GDP due at 1330 GMT, European Central Bank policy decision at 1515 GMT, and the personal consumption expenditure data on Friday.

Spot silver rose 0.4% to $22.76 per ounce, platinum climbed 0.3% $901.53, and palladium gained 0.1% to $964.07.