BENGALURU - Gold prices were slightly lower on Thursday as the dollar firmed on renewed trade tensions, but a decline in global equities helped keep prices near the more than one-month high hit this week.
Spot gold was down 0.1 percent at $1,236.43 per ounce at 1308 GMT, while U.S. gold futures were 0.1 percent lower at $1,241.70 per ounce.
"This is a modest decline, not yet impacting the main trend which still remains moderately positive," said ActivTrades chief analyst Carlo Alberto De Casa.
"If gold could hold above $1,235, this is definitely a very good signal, while surpassing $1,243 would open space for further recoveries."
The U.S. dollar gained after the arrest of a top executive of Chinese tech giant Huawei fed new worries over the Sino-U.S. trade war.
The greenback fell broadly earlier this week after a thaw in trade tensions between Washington and Beijing, making bullion cheaper for holders of other currencies.
Gold has recovered about 7 percent from the 19-month lows hit in mid-August and on Tuesday rose to $1,241.86, its highest since Oct. 26.
"Everything points to rising prices ... technical signals and the seasonal effects are positive, and on top of that the stock market is signalling a global economic crisis," said Alasdair Macleod, head of research at GoldMoney.com.
"The G20 accord whereby America agreed to defer the next round of tariffs against China by 90 days has not convinced markets. The result was that we saw a big fall in Wall Street and indications are that fall will continue."
Global stock markets slumped for a third day running on Thursday.
"The (gold) market is looking for reasons to push higher, but not whilst we wait for another rate hike," said SP Angel analyst John Meyer.
"The U.S. Federal Reserve may go for a rate increase in December. The dollar may strengthen and that may weigh on gold prices on a short-term basis."
The central bank is widely expected to raise rates at its policy meeting on Dec. 18-19 and investors are keeping a close eye on signals for the future path of rate hikes.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
Palladium prices dropped back after outshining the yellow metal for the first time since 2002 on Wednesday, with prices soaring about 50 percent in less than four months to record levels.
Spot palladium slid 2.2 percent to $1,216.80 per ounce after rising to an all-time high of $1,263.56 per ounce in the previous session.
Analysts cited temporary profit-taking as the reason for a dip, but remained concerned about a huge deficit in the market.
"There is a very, very severe shortage of palladium for delivery," Macleod said.
Silver fell 0.9 percent to $14.37 per ounce, while platinum extended losses into a third session, declining 1.1 percent to $791.80 per ounce. The metal earlier hit a low of $784.50, its lowest since Sept. 12.