| NEW YORK
NEW YORK Gold fell on Thursday on frustrations over a lack of more aggressive market stimulus from central banks after China, Europe and Britain eased their monetary policies.
Bullion, which has tumbled several times this year after the Federal Reserve did not mention further easing, was under pressure after monetary easing by the top three central banks signaled a growing level of alarm about the world economy.
Gold's inflation-hedge appeal was weakened by the prospect of slowing economies around the world.
"Deflation at this particular point is the overwhelming worry," said Frank McGhee, head precious metals traders at IBS Metals.
Still, gold has gained almost 4 percent since last Friday on hopes of more Fed stimulus after data showed U.S. manufacturing shrank in June for the first time in nearly three years.
Some dealers also stayed on the sidelines ahead of Friday's closely watched U.S. nonfarm payrolls report.
"If the job numbers coming out tomorrow are better than expected, then you eliminate or start to change the psychology of any imminent Fed action," McGhee said.
Spot gold was down 0.6 percent at $1,606.09 an ounce by 11:50 a.m. EDT (1550 GMT).
The metal initially rose to a session high of $1,623.80 after China unexpectedly lowered its lending rate by 31 basis points to 6 percent, but the brief rally fizzled as investors worried the better-than-expected jobs data might decrease the likelihood of more Fed action.
Gold has been particularly sensitive to central banks' monetary policies. In February, it was up 15 percent for the year after the Fed said it would keep interest rates near zero until late 2014.
On Thursday, bullion is only up 3 percent.
Silver dropped 1.4 percent to $27.71 an ounce.
A U.S. employment report on Thursday showed private-sector employers added 176,000 jobs in June, topping economists' expectations and could bode well for employment data on Friday.
Friday's monthly jobs report is expected to show 90,000 workers were added to nonfarm payrolls in June and the unemployment rate held at 8.2 percent.
(Additional reporting by Susan Thomas, Veronica Brown and Amanda Cooper in London; Editing by Bob Burgdorfer)