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Gold edged higher on Thursday on a weaker dollar, with investors looking to the outcome of a European Central Bank policy meeting later in the day for signs of economic stimulus. The euro zone economy is widely expected to need more stimulus from the ECB, but it may not come at Thursday's meeting.

"There are just not enough (assets) for the ECB to buy. If we see more buying, it will give a fillip to gold," said Jeffrey Halley, business development and market strategist with OANDA Asia Pacific. "As long as the dollar remains weak, we can see gold test $1,350 and make its way up to $1,375-80 levels," he said.

"In the absence of bullish factors, gold tends to recede rather than hold steady. This may be the case now, and we may see further profit-taking near term," HSBC analyst James Steel said. "The next rate rise should put a near-term floor on gold prices. Also bond yields remain low, another supportive factor. That said, gold looks to be on the defensive, at least near term."

“Eyes would also be on tonight’s initial jobless claims, where any disappointment above the 265,000 mark should further fuel calls for the Fed to keep its rates on hold in its upcoming September meeting,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by e-mail. “Gold should go higher given tapering expectations of a Fed rate hike in both September and December.”

Odds for tightening in September dropped to 22 percent as of Wednesday, from 34 percent at the start of the month, while the probability of a move in December is at 52 percent, according to federal funds futures contracts. Either a deferral or a 25-basis-point hike would be “good for gold,” according to RBC Capital Markets.

Reference: Bloomberg, Reuters