Gold edged lower on Thursday, with some investors taking advantage of a recent surge in prices to lock in profits.
Spot gold was down 0.2 percent at $1,231.28 an ounce by 1329 GMT, having on Tuesday hit a more than three-month high of $1,239.68, spurred by a global stock market sell-off which drove interest in the metal considered a safer store of value during times of political and financial uncertainty.
U.S. gold futures were up 0.2 percent at $1,233.9 an ounce.
"Gold is pausing for breath and is probably consolidating for the next possible move higher. Some speculative investors would be in a position to take profit," said Mitsubishi analyst Jonathan Butler.
"It is running into some resistance around $1,240. The next significant level is the $1,250 psychological barrier," Butler added.
Gold prices have gained more than 3 percent so far this month, on track to break a six-month losing streak, the longest since a downturn that ran from the start of August 1996 to the end of January 1997.
European shares attempted to rebound on Thursday after Wall Street suffered its worst day since 2011.
But global stocks are still on course for their worst month since the financial crisis a decade ago, as investors become increasingly nervous about lofty valuations, faster rate hikes in the United States and a Sino-U.S. trade war. SPECULATIVE POSITIONS
"Further equity weakness is likely to entice participants into the precious (metal) complex over the near term," traders at MKS PAMP said in a note.
They said gold could also move higher if speculative investors who have in recent months ramped up bets on lower prices are forced to abandon their positions.
Meanwhile, the European Central Bank kept policy unchanged as expected, on course to claw back unprecedented stimulus even as the growth outlook continues to darken and political turmoil looms in Italy.
Gold briefly turned positive as the dollar moved lower versus the euro after ECB chief Mario Draghi said wage increases were not temporary and expressed confidence about inflation reaching the bank`s target.
Another sign of rising interest in gold was higher inflows into the world`s largest gold-backed exchange-traded fund, SPDR Gold Trust.
Holdings in the fund, which saw outflows of about 4.5 million ounces between late April and early October, have risen to their highest since the end of August.
In other precious metals, palladium fell 1.7 percent to $1,105.60 an ounce, drifting away from a record high of $1,150.50 an ounce hit on Tuesday.
Silver gained 0.1 percent to $14.65 per ounce, and platinum was up 0.1 percent at $827.90 per ounce.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)