Gold prices traded around flat on Thursday, erasing earlier gains after U.S. data reinforced market expectations the Federal Reserve will take a cautious approach to policy easing in the year ahead.

Spot gold edged up 0.1% at $2,589.43 per ounce and U.S. gold futures fell 1.9% to $2,603.60.

Data earlier showed the U.S. economy growing faster than expected in the third quarter, while jobless claims also fell more than anticipated.

"With these GDP prints and the jobless claims, it's showing that the data is fairly firm," said Bart Melek, head of commodity strategies at TD Securities, adding that a solid economy and inflationary risks, including tariffs and spending cuts, reaffirm the Fed has little reason to be aggressive, which historically has not been good for non-yielding gold.

Gold slipped more than 2% to a one-month low earlier in the session after Fed officials dialed back projections for future easing given stubborn inflation.

The drop attracted investors to buy, sending prices as much as 1.5% higher earlier in the session.

"The short-term dip in gold presented a good buy-in opportunity for long-term stackers. You have the looming debt problem, the potential government shutdown, and we're already seeing the posture of the new administration in terms of trying to cut the expenses and minimize the deficits," said Alex Ebkarian, chief operating officer at Allegiance Gold.

U.S. President-elect Donald Trump's pre-inauguration push to sway Congress threatens to complicate efforts to avoid a government shutdown, potentially disrupting services such as air travel and law enforcement ahead of the holidays.

Gold is considered a safe investment option during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.

Investors await Friday's release of core PCE data, the Fed's preferred inflation measure, for further clues on the economic outlook.

Spot silver fell 1.9% to $28.80 per ounce, platinum added 0.2% at $921.45 and palladium rose 0.2% to $905.10.