Gold prices slipped on Wednesday on profit taking after hitting a one-week high earlier on news that a top economic advisor to the Trump administration had resigned, stoking fears of a trade war and knocking down the dollar.
Market watchers said the departure of economic adviser Gary Cohn, a former Wall Street banker, would embolden protectionist forces in the U.S. administration as U.S. President Donald Trump tries to impose hefty tariffs on steel and aluminum.
The dollar hovered near a 14-month low against the yen, while global equities fell. Equities fell, extending Tuesday's falls, which followed the Cohn resignation.
Spot gold was down 0.68 percent at $1,325.10 per ounce at 2:03 p.m. EST, after touching $1,340.42, its highest since Feb. 26. U.S. gold futures for April delivery fell 0.68 percent to $1,326.10 per ounce.
Metals were largely unchanged after the release on Wednesday of the Fed's Beige Book report, which said tightening labor markets strengthen the case for interest rate hikes.
"Yesterday's sharp gains in gold have come under a bit of pressure amid profit-taking. The market remains in ranges (with) conflicting macro fundamentals in play," said Fawad Razaqzada analyst at Forex.com.
"On the one hand the prospect of a trade war should be positive for gold, but bond yields are holding up, and North Korea should be another negative for gold, hence why moves in either direction don't last."
Trump said on Tuesday he saw "possible progress" regarding North Korea after South Korea said Pyongyang is willing to hold talks with the United States on denuclearization and will suspend nuclear tests while discussions are underway.
Gold is used as an alternative investment during times of political and financial uncertainty, and a weaker dollar makes the metal cheaper for holders of other currencies.
Spot gold may fall to $1,327 per ounce following its failure to break above $1,342, according to Reuters technical analyst Wang Tao.
Asian gold-backed exchange-traded funds (ETFs) added more tonnes in February than North America or Europe, reversing Asia's 2017 trend of having more flows out, the World Gold Council said on Tuesday.