Gold ended the session slightly lower on Tuesday, as investors awaited clearer signs from the U.S. Federal Reserve that it is firmly on track to raise interest rates next year, while palladium touched a new 13-year high.
A strong U.S. non-farm payrolls report last week pressured gold prices as it lifted speculation that the Federal Reserve could increase rates as soon as the first quarter of 2015.
Higher rates would encourage investors to switch to assets that pay interest, which tend to be more attractive than bullion.
The dollar dropped 0.1 percent against a basket of currencies.
The market is now eyeing the release of minutes from the Fed's June policy meeting on Wednesday to gauge the central bank's view on interest rates and economic strength.
Earlier, Federal Reserve policymaker Narayana Kocherlakota warned the labor market has a long way to go until the U.S. central bank has reached its goal.
Some traders said a lack of support from physical markets could also weigh on prices. Physical demand in top gold consumer Asia has been weak as the metal is holding above $1,300. Many are waiting for a drop in prices before making any purchases.
Gold is still seeing some safe-haven demand from geopolitical tensions in the Middle East and Ukraine.
Palladium hit a fresh 13-year peak of $871.80 an ounce, before easing to $869 an once, up 0.4 percent on the day. The metal, used in catalytic converters, was aided by last week's data showing U.S. auto sales at an eight-year high in June.
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—By Reuters with CNBC