Gold prices lingered near a one-week trough on Thursday as the dollar hovered near mid-March highs after data showed the U.S. services sector unexpectedly gained steam in August.

Spot gold was mostly flat at $1,917.50 per ounce by 0730 GMT. U.S. gold futures edged 0.1% lower to $1,942.20.

The U.S. dollar was perched at its highest since March 16 and the benchmark U.S. Treasury yield rose after stronger-than-expected U.S. services sector data on Wednesday suggested that inflationary pressures remain.

"While the Fed is done with tightening for the current cycle, what remains highly uncertain is the outlook on Fed cuts in 2024," said OCBC Executive Director and FX Strategist Christopher Wong.

"Gold may continue to stay depressed until the Fed's dovish pivot comes into sight."

Higher U.S. interest rates raise the opportunity cost of holding gold, which does not earn any interest.

Boston Fed President Susan Collins on Wednesday called for the central bank to take its next monetary policy steps carefully, while acknowledging signs of progress in cooling inflation.

U.S. economic growth was modest amid a cooling labour market and slowing inflation pressures in July and August, a Fed report showed on Wednesday.

Some global policymakers expect persistently slower growth in top bullion consumer China, seeing its transition from an infrastructure- and investment-led economy to becoming consumption-driven as "difficult".

Data earlier in the day showed exports in top metals consumer China fell 8.8% year-on-year in August, while imports contracted 7.3%.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.4% on Wednesday.

Silver eased 0.5% to $23.08 per ounce, platinum fell 0.4% to $905.36 and palladium dropped 1.1% to $1,201.73.

(Reporting by Deep Vakil in Bengaluru; Editing by Rashmi Aich, Sherry Jacob-Phillips and Savio D'Souza)