Gold steadied on Wednesday after soft private sector jobs data stoked expectations that Friday's U.S. payrolls report will fall short of forecasts, dampening the prospect of a near-term hike in U.S. interest rates and weighing on the dollar.
Spot gold was at $1,273.31 an ounce, down 0.96 percent from $1,285.60 late on Tuesday.
It had fallen as low as $1,274.79 an ounce earlier in the day after a push to 15-month highs above $1,300 on Monday, fuelled by a weaker dollar, ran out of steam.
The metal is up more than 20 percent this year as expectations faded that the Federal Reserve would push ahead with U.S. interest rate hikes.
Attention is now turning to Friday's non-farm payrolls report, a key barometer of the health of the U.S. economy.
"A weaker U.S. employment report on Friday will push gold prices back above $1,300," ABN Amro analyst Georgette Boele told the Reuters Global Gold Forum on Wednesday.
"Speculative positions are in excessive territory but they could remain there for quite some time, meaning prices could go lot higher before the correction starts."
A report by payrolls processor ADP showed on Wednesday that U.S. private employers added 156,000 jobs in April, well below economists' expectations and the weakest gain in three years.
The dollar gave up earlier slim gains against the euro after the report, though it later found support from stronger than expected international trade data.
Gold is highly exposed to interest rates and returns on other assets, as rising rates lift the opportunity cost of holding non-yielding bullion.
Atlanta Fed President Dennis Lockhart said on Tuesday the United States could see two more interest rate rises this year, while San Francisco Fed President John Williams said he would support a rate hike in June as long as he sees continued progress on the economy, inflation and jobs.
Uncertainty over the timing of rate moves is keeping investors cautious on gold, helping limit any moves.
"The difficulty gold is experiencing in staying above $1,300 does not necessarily mean the bull rally is ending. But the rally may be tired and in need of consolidation. This can trigger profit-taking," HSBC said in a note.
U.S. gold futures for June delivery were down $16.30 an ounce at $1,275.50.
Among other precious metals, silver futures were down 1.17 percent at $17.30 an ounce, while platinum futures were down 1.8 percent at $1,052.80 an ounce and palladium futures were down 2.09 percent at $596.15 an ounce.