Gold prices were steady on Thursday, supported by renewed worries about a global economic slowdown, but bullion's failure to rally at a time of extreme volatility in equity and energy markets suggested the metal could pull back in the near term.
Economic growth fears hit demand expectations for industrial metals and palladium, which is used mostly by the automobile industry as a catalytic converter. Palladium dropped 5 percent briefly before paring losses.
Gold was underpinned after James Bullard, president of the St. Louis Fed and a top U.S. central banker, said the Fed should keep buying bonds for longer than planned in the face of volatile markets and falling inflation expectations, even as another Fed policymaker warned against over-reaction.
U.S. stocks edged higher in afternoon trading on Thursday, rebounding from earlier declines, as a flurry of economic reports eased fears about the potential impact of a weakening global economy on the United States.
"Despite the share prices weakness and the concerns about growth that spread in the financial markets, people do not seem to be returning to the gold market en masse," said Julius Baer analyst Carsten Menke.
Spot gold flat at $1,240 an ounce. The metal rose to its highest since Sept. 11 at $1,249.30 in the previous session.
U.S. gold futures settled down $3.60 an ounce at $1,241.20 in heavy turnover.
The dollar was down 0.2 percent against a basket of main currencies, while major U.S. and European stock indexes were mostly lower.