Gold flattened on Thursday as expectations that the Federal Reserve would exercise patience in raising interest rates left U.S. bond yields flat, though a stronger dollar and rising stock markets limited the gains.
Minutes from the Federal Reserve's latest policy meeting on Wednesday reassured markets that it was in no hurry to raise interest rates, lifting European shares by 2.5 percent.
That initially weighed on gold, but the metal later moved higher. Gold, which has no yield, tends to suffer in a rising interest rate environment.
Spot gold was last down about 0.1 percent at $1,208 an ounce, while U.S. gold futures for February delivery were flat at $1,209 an ounce.
"The fact that we kicked off the year with this kind of resilience is sending a signal that negative sentiment has been forced to be reduced," Saxo Bank senior manager Ole Hansen said.
"And it is because this continued drop in bond yields and deflation risks outside the U.S. don't represent an environment where the Fed is going to aggressively raise interest rates."