Gold trimmed its gains Tuesday afternoon after touching three-month highs in the morning, underpinned by global growth concerns and as another sharp drop in the oil price pushed investors towards safe-haven assets.
Weak Chinese manufacturing data on Monday underscored the challenges for the world economy, while volatility in oil and other assets fueled interest in gold as a haven from market turmoil.
Analysts said there had been some short covering in the gold futures market as traders who at the turn of the year had expected four U.S. interest rate rises this year were now less sure the Federal Reserve would tighten monetary policy so much.
Spot gold touched $1,131.40 an ounce early on Tuesday, its strongest since Nov. 3, but turned negative to trade down 0.11 percent at $1,12711. U.S. gold for April delivery was nearly flat at $1,128 an ounce.