Gold on Tuesday retreated from the more than 3-week highs touched in the previous session after the dollar rebounded and risk appetite and bond yields recovered, easing nerves over recession worries.
Spot gold was down 0.5 percent at $1,315.30 per ounce as of 10:11 a.m. EDT (1411 GMT), after hitting its highest since Feb. 28 at $1,324.33 on Monday. U.S. gold futures were down 0.6 percent at $1,315 an ounce.
"The trend of the U.S. dollar has reversed a little bit and at the same time there was a bounce back from the lows across yield curves," said Bart Melek, head of commodity strategies at TD Securities in Toronto.
Benchmark bond yields ticked higher on Tuesday after a few days dominated by recession worries, which prompted investors to seek safe-haven assets such as gold. An inverted yield curve is widely seen as indicating an economic recession.
"The firm U.S. dollar remains a big impediment (for gold)," Melek added. "Even with a very dovish U.S. Federal Reserve, the market is still looking at other asset classes such as equities. Until that turns a little sour, we should probably not see huge inflows into gold."
The dollar index was up 0.2 percent. A higher greenback makes gold expensive for buyers holding other currencies.
Gold has gained about 14 percent since touching more than 1-1/2-year lows last August, on the back of a dovish U.S. Fed and global growth concerns.
Calm returned to global markets on Tuesday, with gains on European and Asian bourses and higher benchmark bond yields.
The 10-year U.S. Treasury yield edged up, having fallen below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve.
"Overall, though, conditions remain supportive for both gold and to a lesser degree, silver to stage a rally. We need to see further price action and some technical confirmation to increase our conviction that gold and silver are indeed headed higher," Fawad Razaqzada market analyst with Forex.com wrote in a note.
"The fact that gold has held key support around the $1,275-$1,285 area is bullish, as the move below the long-term pivotal $1,300 hurdles proved to be temporary."
Investors are also watching for the latest round of China-U.S. trade negotiations, scheduled to start on Thursday in Beijing, and British lawmakers' bid to find a way through a deadlock over Britain's plans to leave the European Union. The lawmakers will vote on a range of Brexit options on Wednesday.
Palladium slipped 1.9 percent to $1,546.16 per ounce, after touching its lowest in about two weeks at $1,532.56 in the previous session.
Silver was down 0.6 percent at $15.45, while platinum rose 0.4 percent to $858.60 an ounce.
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