Gold is sensitive to rising U.S. rates, which would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
"With the U.S. dollar index dipping to 96.717 from 97.173 previously, gold had an opportunity to push to the upside, buoyed by lower yields," HSBC said in a note. "We see potential headwinds for gold if the market begins to assess a U.S. rate rise as coming sooner, rather than later."
The world's largest gold-backed exchange-traded fund, SPDR Gold Shares, has seen an outflow of nearly 28 tonnes in the last three weeks.
Among other precious metals, palladium rose to its highest since mid-October at $708 an ounce, and was later at $695.22, down 0.97 percent.
The autocatalyst metal has soared 18 percent so far in July, its best monthly performance in almost 8-1/2 years, as it catches up on gains made by other precious metals in the wake of the Brexit vote, and benefits from greater demand for cyclical assets.
Platinum hit a fresh 14-month high at $1,154.20 and was later down 0.18 percent at $1,130.99 an ounce. Silver was down 0.81 at $20.17 an ounce.