Gold slipped from earlier highs on Tuesday, ending lower as the dollar strengthened and investors looked for further indications that the U.S. Federal Reserve may soon end or taper its economic stimulus program.
Many participants are on hold until Friday's June U.S. employment report offers new insights into economic growth.
The precious metal was higher in early business on short cover buying after ending June with its biggest quarterly loss since at least 1968. But those gains were fleeting as some money managers used the opportunity to sell out of long positions.
"Investors have gradually come to the realization that there is no reason to own the asset class now because at some point interest rates are going to go up and there is no inflation anywhere to be seen," said Troy Gayeski, partner and senior portfolio manager at SkyBridge, which has $7.9 billion assets under management and advisement.
Investors, wary of taking fresh positions before the U.S. Independence Day holiday on Thursday, are looking ahead to Friday's U.S. labor report. A strong reading would lift both U.S. Treasury yields and the dollar, and in turn weigh on gold.
"If numbers are better than expected, selling momentum could kick in again," MKS Capital senior vice president Bernard Sin said.