Gold on Tuesday held near three-week lows hit in the previous session on diminishing demand for safe-haven bullion as equities rallied and the US dollar gained versus the yen.
Spot gold was mostly unchanged at $1,255.90 per ounce, as of 0733 GMT. Bullion prices had on Monday dropped 0.9 per cent to $1,253.66 an ounce, its weakest since April 11. US gold futures were up 0.1 per cent at $1,256.70 an ounce.
Asian shares rose to near two-year highs on Tuesday and the dollar hit a one-month high against the yen as US Treasury yields surged.
Firmer equities discourage the buying of non-interest-paying bullion, which is priced in dollars.
“Gold is just shy of important daily support today in the shape of its 200-day moving average at $1,253. A daily close below here would be a bearish technical development,” said Jeffrey Halley, senior market analyst, OANDA.
“The fall (on Monday) implies that the safe haven bid that has underpinned gold in recent times is rapidly eroding.”
US President Donald Trump seemed to take some of the urgency out of geopolitical worries on Monday when he said he was open to meeting North Korean leader Kim Jong Un in the right circumstances. But that was followed on Tuesday by Pyongyang saying a US bomber training drill had brought the Korean peninsula to the brink of nuclear war.
“The geopolitical concerns are receding but there are still chances of them coming back again. Gold will retrace but it will stay range bound for a while, before taking up any direction," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.
Also, the US Federal Reserve starts a two-day policy meeting later in the day, and investors may be waiting for any direction from there.
“We don't see any new changes for the interest rate hike, which may be good for the non-interest bearing gold,” said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
Interest rate futures are still showing a roughly 70 per cent chance the Fed will raise rates in June, according to CME's FedWatch.
“We see gold dropping to around $1,240 over the course of May, but still see a recovery back close to the old highs given geopolitical tensions and an expected weaker dollar on account of continuing gridlock in Washington,” said INTL FCStone analyst Edward Meir.
Spot silver gained 0.4 per cent to $16.91 an ounce. Silver fell 2 per cent to $16.78 an ounce on Monday, levels last seen on March 10.
Platinum was 0.5 per cent higher at $929.50, after falling to a four-month low at $923 in the previous session. Palladium fell about 0.2 per cent at $812.88.