Gold slipped from a near three-month peak on Tuesday, pressured by a strong dollar as the euro fell on nervousness ahead of the French elections and weak German industry data.
Spot gold was down 0.17 percent at $1,232.84 per ounce. In the previous session, the metal touched $1,235.73, its highest since Nov. 11.
U.S. gold futures gained $4 to settle at $1236.10.
While controversy over President Donald Trump's temporary travel ban on people from seven Muslim-majority countries has recently boosted the dollar and gold as safe-haven assets, focus shifted to Europe on Tuesday.
"For all of the issues that are raised by Trump, we have to remember it's a two-sided story for the dollar and what's happening in Europe is just as important," said Tom Kendall, head of precious metals strategy at ICBC Standard Bank.
"Today the figures were very disappointing in German manufacturing."
Weaker output in manufacturing and construction drove the biggest monthly drop in German industrial production in nearly eight years in December, dashing prospects for robust growth in the final quarter of 2016.
The euro was set for its biggest daily fall of 2017 against a broadly stronger U.S. dollar as investors feared far-right, eurosceptic candidate Marine Le Pen was gaining momentum before France's presidential election.
The dollar index, which measures the greenback against a basket of currencies, was up 0.37 percent at 100.28.
Kendall was cautious about a potential reversal in gold, which has gained nearly 10 percent since mid-December.
"When the Trump tweets turn away from immigration and towards domestic policies designed to stimulate U.S. growth, then...I would expect at that point this gold rally to unwind."
The prospects of further U.S. interest rate hikes was also a concern for gold, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
But gold has recently appreciated as an asset whether in euros, yen pounds or dollars, said Matt France, head of institutional metals sales in Asia for broker Marex Spectron.
"This is a genuine re-allocation into gold as a safe haven trade not just a reactive trade to U.S. dollar moves," he said in a note.
Among other precious metals, silver was down 0.11 percent at $17.71. Earlier, silver traded at $17.76, its strongest since Nov. 11.
Platinum fell 0.86 percent to $1,002.50, after hitting its highest since Nov. 9 at $1,015.20 earlier in the day.
"Short term, a pause can't be ruled out and a consolidation lower towards an ascending trend near $990/985 is likely," Societe Generale Head of Technical Analysis Stephanie Aymes said in a note.
"A move beyond $1,021 will be needed for extending the rebound."
Palladium shed 1.49 percent to $760.47.