Gold prices edged up early on Thursday after hitting a near four-month high in the previous session, on a weaker dollar and as a rally in equities ran out of steam.
Spot gold was up 0.1 per cent at $1,318.49 an ounce by 0048 GMT. Prices hit a near four-month high at $1,326.56 an ounce on Wednesday.
US gold futures were little changed at $1,319 an ounce.
Gold prices on Wednesday reversed their losses and rose over 1 per cent as the dollar swooned after a report that Chinese officials had recommended slowing or halting purchases of US Treasury securities.
The US dollar fell to a more than six-week low against the Japanese yen and weakened against a basket of major currencies on Wednesday after the report. It was mostly unchanged at 92.320 on Thursday.
The yen has been buoyed this week after a cut in the Bank of Japan's bond buying on Tuesday fuelled speculation that the central bank could eventually seek to exit from its stimulus later this year, following the footsteps of other major central banks.
The New Year rally in Asian shares paused on Thursday as concerns about the US administration's protectionist stance hit Wall Street while US bonds were dented by speculation China may curtail buying.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.35 per cent to 828.96 tonnes on Wednesday from Tuesday.
UBS on Wednesday said that its gold forecast for 2018 year-end stands at $1,325 per ounce.
The class action brought by thousands of mineworkers who contracted lung diseases while working for South African gold miners has been postponed because the parties are close to a settlement, lawyers for the companies said on Wednesday.