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[LONDON] Gold fell on Wednesday as a stronger dollar and a rebound in stock markets reduced its appeal as a safe asset.
Asian shares made their first real rally of the year after better-than-expected Chinese trade data, which offered some rare optimism for the global economy.
The pan-European FTSEurofirst 300 index rose 1.4 per cent after four declining sessions, making gold less attractive.
Spot gold was down 0.4 per cent to US$1,082.30 an ounce by 1056 GMT while US gold futures were down 0.4 per cent at US$1,080.80.
Gold rallied to a nine-week top of US$1,112 last week, but expectations of further US interest rate increases lowered demand for the non-interest-paying metal while boosting the dollar.
"The pause in the gold's rally underlines the difficulty gold has in rallying when there is expectation of Fed rate hikes, even if other news is supportive," Macquarie analyst Matthew Turner said.
"People still think the dollar and rates are going up and therefore the medium-term case is bearish."
The Federal Reserve raised rates in December and attention has shifted to how many hikes will follow in 2016.
The dollar and risk-sensitive currencies recovered ground against the yen and the euro after China's central bank held the yuan steady and better-than-expected Chinese trade data helped reduce some of bearishness toward the world's second largest economy.
But with Chinese economic growth slowing and its stock markets still vulnerable, analysts see it as unlikely that gold will lose too much ground.
"It doesn't mean it's all over, the market is pretty short and a lot of the uncertainty about the global economy has not been resolved," Macquarie's Mr Turner said.
Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 2.1 tonnes on Monday, data from the fund showed.
China launched interbank gold trading at the beginning of this year as part of a broader drive to open up the country's bullion market and increase financial investment in the world's largest consumer of the precious metal.
Among other precious metals, palladium rose 3 per cent to US$485.20 an ounce, after sliding to a 5-1/2-year low of US$449.55 on Tuesday.
Silver gained 0.3 per cent at US$13.83 an ounce, while platinum was up 1.4 per cent at US$844.69 an ounce.
"Platinum has now been cheaper than gold continuously for precisely one year, which should generate increased jewellery demand for platinum," Commerzbank said in a note.