Gold settled lower on Tuesday thanks to a rise in equities and uncertainty over the U.S. growth outlook after a disappointing jobs report last week.
Markets speculated that Friday's non-farm payrolls showing U.S. employers added jobs at a much slower pace than expected could prompt the Federal Reserve to proceed cautiously in tapering its monetary stimulus program, causing equities and the dollar to drop.
Gold, which benefits from a low interest rate environment that encourages investors to put money into non-interest-bearing assets, rallied to its highest level since Dec. 12 at $1,255.00 an ounce.
The dollar steadied against a basket of six major currencies, rebounding from its lowest level since Jan. 2 hit after the U.S. jobs report on Friday, while U.S. Treasury yields steadied at 2.8 percent.
As gold pays no interest, returns on U.S. bonds are closely watched by the market.