Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced.
"Technicals show that gold and silver prices need some correction and will see some mild rebound. But Friday's jobs data is going to be crucial," said Jiang Shu, chief analyst at Shandong Gold Group.
"If the jobs data is going to be good, gold will fall to $1,260-$1,270 levels as markets will hope for a rate hike in September."
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, posted the first monthly dip for four months in August. They fell 1.27 percent to 943.23 tonnes on Wednesday and were down 1.6 percent for the month.
In other precious metals, silver gained 1.16 percent at $18.83 an ounce.
Platinum dropped to a nine-week low of $1,035.15, and was last down 0.19 percent at $1,046, while palladium fell 0.57 percent to $665.70, after hitting a six-week low.
CORRECTION: Spot gold's session low was $1,301.91. An earlier version misstated that figure by one cent.