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Gold steadied after a five-day slide on Wednesday, but stayed within striking distance of a four-week low as investors positioned for a US rate hike this year.
Prices could remain under pressure from weak technicals and outflows from exchange-traded funds (ETFs) that have hit precious metals across the board. Spot gold had ticked up 0.4 per cent to $1,121.80 an ounce by 0327 GMT, but was not far from an overnight low of $1,114.10, its weakest since October 2. A breach of key technical levels could send prices even lower ahead of a US jobs report this week that could be key in determining the timing of a rate hike.
"After breaking through trend line support around $1,119 overnight, the next downside target for gold currently sits around $1,105," said MKS Group trader Sam Laughlin.
Bullion has been under pressure since the Federal Reserve last week hinted at a rate hike in December, reversing earlier market expectations that the first US rate increase in nearly a decade could be delayed to next year on global growth concerns.
Gold tends to benefit from very low rates as a non-interest-paying asset.
Markets continue to adjust to the possibility of a December rate hike, sending US debt yields and the dollar higher.
Strength in equity markets was also dragging on gold. Soft economic data on Tuesday failed to support gold. New orders for US factory goods fell for a second straight month in September.
Bullion traders are waiting for more US data to gauge the strength of the economy and its impact on the Fed's monetary policy. All eyes will be on the US nonfarm payrolls report due on Friday, while the ADP employment report and ISM report on services sector sentiment due later on Wednesday could also be market movers.
Assets in SPDR Gold Trust, the top bullion ETF, fell to a five-week low of 6.30 tonnes on Tuesday. Investors are exiting precious metals across the board.
In October, platinum and palladium-backed ETFs tracked by Reuters posted their biggest monthly outflows since the data series began in 2010. Platinum slid to its lowest in nearly four weeks on Tuesday, while palladium fell to a five-week low. Both metals were slightly higher on Wednesday. The bulk of the losses in the platinum group metals (PGMs) have been driven by liquidations out of exchange-traded funds, HSBC said in a note.
"Until ETFs show signs of stabilisation, PGMs may remain under pressure near term," it said.
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