Strong buying of physical bullion on Tuesday helped pare losses from an earlier gold decline caused by a dollar rise and technical selling, but the metal continued to feel pressure from chart-based sell orders which stopped the recovery.
Benchmark gold futures showed a gain in early afternoon, while the spot price was still down a hair after failing to rise above technical resistance at its 14-day moving average near $1,400 an ounce, where selling was triggered, traders said.
"Every time when gold prices drop, we start to see a sharp pick-up in physical demand. Dealers are buying for fear of a sharp correction higher," said Phillip Streible, senior commodities broker at R.J. O'Brien.
The metal fell 1.5 percent earlier in the session on worries about continued outflow in gold-backed exchange-traded funds and an equities market rally driven by economic optimism.
Spot gold was last down 0.9 percent to $1,380 an ounce, after trading as low as $1,374.28 earlier.
U.S. gold futures settled $7.70 lower at $1,378.90 an ounce.
Volume was higher than usual due to Tuesday's Comex June option expiration and pent-up trading from Monday, traders said.
The U.S. market was shut on Monday due to the Memorial Day holiday.
Trading turnover was 360,000 contracts, on track to set the highest turnover since April 15 when gold prices tumbled 8.5 percent.
In physical market news, the U.S. Mint said on Tuesday it is resuming sales of its small, one-tenth ounce American Eagle gold bullion coins, a month after the precious metal's plunge to two-year lows triggered soaring demand.