Gold held nearly steady on Tuesday after hitting a five-month high last week, while traders kept one eye on U.S. economic data and another on tensions in the Middle East.
Spot gold ticked 0.1% higher at $1,975.39 per ounce after falling as much as 1% earlier in the session. U.S. gold futures settled 0.1% lower at $1,986.1.
"We saw some profit taking earlier in the session and then traders came to buy the dip... $2,000 is still (on the) cards for the near-term or even a new record high if there is an escalation in the Middle East crisis," said Jim Wyckoff, senior analyst at Kitco Metals.
Gold prices have climbed about 9% in the past two weeks, hitting a five-month high of $1,997.09 on Oct. 20, a rally mainly fuelled by safe-haven inflows on concern Israel's war with Islamist group Hamas will spread.
But gold's inability to rally (this week) is a signal that "safe-haven demand has started to wane, as markets learn to live with tensions in the Middle East," Marios Hadjikyriacos, senior investment analyst at forex broker XM, wrote in a note.
Limiting gains for bullion, the dollar index rose against its rivals, making gold more expensive for overseas buyer.
Market focus is on the U.S. third-quarter GDP figures due on Thursday and the U.S. PCE price index on Friday that could influence the Federal Reserve's outlook on interest rates.
"Direction of gold for the foreseeable future will be linked to the direction of interest rates. If the economy weakens, and there's a view in the market that we are entering a recession, then interest rates will likely decline and the price of gold will likely go up," said Chris Mancini, associate portfolio manager of the Gabelli Gold Fund.
Spot silver was flat at $22.97 an ounce, platinum dipped 1.2% to $885.88, while palladium gained 0.8% to $1,127.04.