Gold prices on Wednesday fell from eight-week highs hit in the previous session as the dollar recovered from lows and investors booked profits ahead of Donald Trump's inaguration as U.S. president later this week.
Spot gold fell 0.3 percent to $1,212.43 per ounce by 0706 GMT. Bullion hit an eight-week high of $1,218.64 in the previous session.
U.S. gold futures fell 0.1 percent to $1,212 per ounce.
"After a quick push higher right on the open, gold succumbed to some profit taking and producer selling throughout the morning," MKS PAMP Group trader Alex Thorndike said.
"A slight reprieve for the greenback also helped to soften gold and silver."
The dollar index, which measures the greenback against a basket of currencies, rose 0.3 percent to 100.61.
In the previous session, it hit a low of 100.26, its weakest since Dec. 8, following Trump's comments in the Wall Street Journal that the strong greenback was "killing us."
"Once Trump takes office and there is some clarity (on his policies), the focus will come back to the fact Fed is going to hike rates a number of times this year. That would reduce the appeal of gold as an asset," Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.
Several Fed officials have been making a case for a gradual hike in U.S. interest rates.
Fed Chair Janet Yellen will have an opportunity to lay out her thinking with speeches on monetary policy on Wednesday and Thursday this week.
Higher interest rates would reduce demand for non-interest bearing bullion holdings.
Trump's campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, as well as driving a sell-off in Treasuries, but his protectionist statements and off-the-cuff Tweets have led many investors to opt for gold instead.
Gold, considered a safe-haven investment during times of geopolitical and financial uncertainty, has risen more than 8 percent since dropping to a more than 10-1/2-month-low in December.
Chinese President Xi Jinping offered a vigorous defence of globalisation on Tuesday, pushing back against the "America First" rhetoric of Trump and signalling Beijing's desire to play a bigger role on the global stage.
"The extent to which globalization retreats and the mood and sentiment coming out of Davos may impact gold. Clearly there is enough investor concern to send gold higher," HSBC analyst James Steel said in a note.
Spot silver fell 0.3 percent to $17.11 an ounce, just off a five-week high hit earlier in the day and in the prior session.
Platinum dropped 0.1 percent to $973.15 an ounce, while palladium fell 0.5 percent to $743.50.
(Reporting By Nallur Sethuraman in Bengaluru; Editing by Christian Schmollinger and Sonali Paul)