Gold closed above a three-week low on Thursday, following its biggest drop in over a month, as the dollar rose following strong U.S. housing data that stoked expectations the Federal Reserve could raise interest rates soon.
Spot gold was up 0.8 percent at $1,197 an ounce, after touching its lowest since April 1 at $1,183.65.
The metal fell 1.3 percent on Wednesday, its biggest single-day decline since March 6, pressured by a stronger dollar after U.S. home resales surged to their highest level in 18 months in March.
U.S. gold futures for June delivery closed up $7.40 at $1,194.30 an ounce.
"On the one hand, you are seeing some geopolitical support, limiting any downside, on the other the U.S. interest rates story supports the dollar," Citi strategist David Wilson said.
"It's difficult to get excited about gold one way or another."
Bullion was hit by a stronger dollar, up 0.3 percent against a basket of major currencies after data showed U.S. home resales surged to their highest level in 18 months in March as more homes came on the market.
The positive data prompted many to think the Fed could raise interest rates as early as June, a move that could further pressure gold, a non-interest-paying asset.
The focus will now be on more U.S. data to be released later in the day and the Fed's policy meeting later this month, as traders look for stronger clues about the timing of the rate rise.
"Both the macroeconomic environment and the physical market remain unsupportive of prices," said ANZ analyst Victor Thianpiriya.
Top bullion consumer India celebrated the gold-buying festival of Akshaya Tritiya on Tuesday.
"Now that Akshaya Tritiya is over, gold demand in India is soon likely to be somewhat more subdued again," Commerzbank said in a note. Markets were also watching the unfolding of the Greek debt crisis.
Greece can scrape together enough cash to meet its payment obligations into June, euro zone and Greek officials said on Wednesday, playing down fears of an imminent default even as hopes receded of a deal with its creditors to release fresh aid.
Lower European equities, after sluggish euro zone and German purchasing manager data, were limiting the metal's downside. Gold is usually seen as an hedge against riskier assets.
Elsewhere, China's factory activity contracted at its fastest pace in a year in April, a private survey showed, suggesting that economic conditions are still deteriorating.