Global equities were up 0.3 percent on Tuesday, with Asian shares rising from two-year lows overnight on the back of an extended rebound among Wall Street stocks after their biggest weekly drop in two years. Shares remained under some pressure in Europe, however, indicating caution in the market. Investors are now awaiting U.S. January inflation data, due on Wednesday, for clues on the next move in financial markets.
Inflation is sometimes seen as gold-positive, because bullion is seen as a safe store of value at a time when price pressures are rising, but expectations that the U.S. Federal Reserve will lift interest rates to fight inflation make the non-yielding metal less attractive.
"Usually, if these readings are a bit higher than expected, that triggers some expectations for higher rates, which should support the dollar but will weigh on gold if you get yields moving up," ABN Amro's Boele said.
Among other precious metals, silver was flat at $16.55 an ounce, while platinum vacillated around $973.80. Palladium was up 0.08 percent at $985.22.
The autocatalyst metal has slid nearly 14 percent since hitting a record $1,138 in mid-January but remains at elevated levels on expectations that the market will remain in deficit for a while yet.
"Over time, prices will provide the incentive to right palladium's balance, driving substitution in autocatalysts and industrial uses, as well as supporting the expansion of both recycling and new production capacity," ICBC Standard Bank said in a note. "But these are multi-year processes and, in the meantime, prices will need to incentivize the release of sufficient inventory to plug an ongoing deficit."