Gold steadied on Wednesday, supported by a dip in the dollar, while gains were capped by a rally in global stocks following reassuring economic data from the United States and China and optimism the two countries would strike a trade deal.
Spot gold was unchanged at $1,292.29 per ounce as of 1019 GMT, having touched its lowest level since March 7 at $1,284.76 in the previous session. U.S. gold futures were up 0.1 percent to $1,296.20 an ounce.
Rising stock markets are holding gold back, said Fawad Razaqzada, market analyst with Forex.com, adding, "investors are moving into racier equity markets rather than slower moving precious markets."
"Given the fundamental factors, even though the equity markets remain supported, it doesn't mean gold will fall. With the U.S. Federal Reserve being dovish, the dollar being low, and yields being lower, the fundamental environment for gold itself is positive."
Signs of progress in U.S.-China trade talks this week and decent factory activity data from both the countries in recent days has lifted investor sentiment and taken the edge off world recession fears.
The dollar index, which was sought over gold last year against a backdrop of an unfolding trade war, was down 0.4 percent, making bullion cheaper for holders of other currencies. [USD/]
On the technical front, "a recovery of the psychological threshold of $1,300 would be a positive signal while a fall below $1,280 could open space for a further decline to $1,260, with the latter scenario seen as the least likely, at least for now," ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Investors are now waiting for clues on the strength of the U.S. economy from non-farm payrolls data due on Friday.
Meanwhile, British Prime Minister Theresa May will meet opposition leader Jeremy Corbyn to thrash out a Brexit compromise, a gamble that could finally see a European Union divorce deal agreed but also tear her party apart.
Indicative of investor sentiment toward bullion, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since March 8 at 768.10 tonnes on Tuesday.
Among other precious metals, silver gained 0.3 percent to $15.16 per ounce, having touched its lowest level since late December at $14.90 in the previous session.
"The fact that there was no willingness from the sellers to hold the ground below $15 suggest to me that demand has outweighed supply and ... we could see prices start to climb higher from here," Forex.com's Razaqzada said.
Spot palladium was down 0.2 percent at $1,426.48 an ounce, while platinum rose 1.5 percent to $858.74 an ounce.