Gold for February delivery, the most actively traded contract on the Comex, fell on Thursday by $9 to settle at $1,650.9 an ounce. Early in the day, the price hit a fresh five-week high.

Losses in gold were partly a result of the good news that poured in, and partly because buyers are cashing in on previous gains after investors took the price to the highest level since mid-December.

Despite the day's decline, gold remained above its 200-day moving average.

Earlier Thursday, the U.S. Labor Department said in the week ended Jan. 14, the number of Americans who filed for initial unemployment claims declined by 50,000 to 352,000 -- the lowest level since April 2008.

Meanwhile, well-received Spanish and French bond auctions also helped underpin sentiment. Spain sold €6.61 billion ($8.56 billion) in bonds, compared with a target range of €3.5 billion ($4.53 billion) to €4.5 billion ($5.82 billion). France sold a total of €1.50 billion ($1.94 billion) of Treasury notes, compared with a €1 billion ($1.29 billion) - €1.5 billion ($1.94 billion) target.

Both countries' credit ratings were downgraded by Standard & Poor's last week, but were able to pay lower borrowing costs than at previous auctions.

Gold has gained 6 percent so far this year, outperforming most other assets. While it is a far cry from a record close to $1,900 in late summer, it is an encouraging start to the year, analysts at Capital Economics said in a note, according to MarketWatch.

(O)n balance, we continue to forecast new highs in 2012 as demand for a safe haven from the crisis in the euro-zone provides a further boost, Capital Economics' analysts said.