Gold slipped on Tuesday from the previous day's four-month high, reflecting losses across the commodities complex as the U.S. dollar clawed back some losses the day after hitting a three-year low against a basket of currencies.
Gold's move lower came after four consecutive days of gains due to the greenback's retreat, which made dollar-priced gold cheaper for holders of other currencies.
"The gold market has gained a lot of momentum over the last few sessions to the upside, so its understandable that its taking a breather on profit-taking, said Phillip Streible, senior commodities strategist at RJO Futures in Chicago.
In early trading, the dollar rose against the euro. On Monday the dollar hit its lowest against the single currency since late 2014. The greenback has weakened as markets have grown more confident that a global recovery would outpace U.S. growth.
Stock market strength also weighed on gold, said George Gero, managing director of RBC Wealth Management. Gero added that broad commodity weakness also weighed on gold prices. U.S. wheat futures fell as did crude oil and copper, while nickel slid more than 5 percent.
Gold remained relatively firm after three 2017 U.S. interest rate hikes, but further rate hikes could pressure gold prices by raising the opportunity cost of non-yielding bullion.
"We see a trading range of $1,225-$1,430 for gold this year, with an average price of $1,290," INTL FCStone said in a note. "Our number suggests we are closer to a top (than) a bottom, a position we are comfortable with as we are not sure gold could withstand the higher-yield environment going into next year, especially if the (weaker) dollar eventually reverses course."
Palladium, which hit a record high of $1,138 an ounce on Monday, was down 3 percent at $1,091.97 an ounce. It has had a sustained rally as high demand in the auto industry fueled supply concerns, sending Nymex palladium futures net long positions to record highs.
Silver was down 1 percent at $17.17 an ounce, off the previous day's three-month high of $17.42. Platinum was up 0.2 percent at $998, touching a Monday peak of $1,001.40, its strongest since Sept. 11.