Gold settled lower on Tuesday after posting a 1 percent rally in the previous session, as steadier U.S. equities and a stronger dollar prompted investors to unwind some of their safety bets in bullion.
A resumption in wage talks between South Africa's top platinum producers and their miners eased supply worries in platinum, briefly sending the metal to its lowest level this year.
On Monday, gold rallied after disappointing manufacturing data from the United States and China pummeled Wall Street, while jitters about emerging markets bolstered an investor flight to safety.
Chart: Precious Metals
"The gold positive flows from the loss of risk appetite, as a result of emerging-market turmoil, provided support but it was limited and short lived," said Bart Melek, head of commodity strategy at TD Securities.
"So far, institutional investors continue to stay clear, while hedge funds are only engaging on a relatively small scale on the long side," said Melek.
Spot gold fell 0.4 percent to $1,252 an ounce, while U.S. gold futures for April ended 0.7 percent lower at $1,251.20 an ounce.
The dollar edged up 0.1 percent versus a basket of main currencies. The U.S. currency has rallied recently on turbulence in emerging markets as investors shifted money to traditional safe havens in the developed world.
A rebound in U.S. stocks also dampened gold's safe-haven appeal. The S&P 500 index rose nearly 1 percent on sturdy corporate results, as the market fought to regain its footing following its largest selloff in months a day earlier.
Bullion has gained around 4 percent so far this year, after a 28 percent drop in 2013, as slowing growth in China and capital outflows from emerging nations hit equity markets.
Gold, usually regarded as a safe haven, tends to appreciate when riskier assets like equities lose ground, as investors look for alternatives to protect their money.
Market focus will now turn to Friday's U.S. non-farm payrolls report for further clues on the state of the U.S. economy.
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