Gold prices were volatile on Wednesday as markets responded to a $2 trillion U.S. government stimulus package to soften the economic damage of the coronavirus outbreak.
Spot gold, which rose as much as 5% on Tuesday was up 0.1% to $1,611.73 per ounce. It had earlier fallen 1% after notching up a gain of 1%. U.S. gold futures fell 1.6% to $1,633.20, while world stocks rebounded on expectations of a $2 trillion U.S. fiscal stimulus package being approved.
"The big downside risk (in gold) remains the potential for those sharp sell-offs in equity markets to be repeated, especially following yesterday's huge rally," OANDA analyst Craig Erlam said in a note.
Senate majority leader Mitch McConnell said the U.S. package had been agreed upon and would be put to a vote on Wednesday.
"We still see a favorable backdrop for gold as the economic fallout from the corona crisis should strengthen safe-haven demand," Julius Baer analyst Carsten Menke said.
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.3% on Tuesday.
Benchmark spot gold prices traded below U.S. gold futures in a sign that the market is worried that air travel restrictions and refinery closures will hamper shipments of bullion to the United States to meet contractual requirements.
Among other metals, palladium rose 3.9% to $2,007.33 per ounce, while platinum gained 0.5% to $711.83. Both climbed more than 10% in the previous session after a lockdown in major producer South Africa.
Silver fell 0.4% to $14.22 per ounce.