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[BENGALURU] Gold was down for a second session on Tuesday as Asian shares extended a rally on growing expectations that Britain would opt to remain in the European Union in a referendum later this week.
Two opinion polls on Monday suggested support for Britain staying in the European Union had recovered some ground following the murder of a pro-EU lawmaker.
Betfair betting odds have also shown Britain's "Remain" option gaining traction, with the implied probability of such an outcome at 78 per cent on Monday, up from 60-67 per cent on Friday.
Spot gold fell 0.5 per cent to US$1,283.50 an ounce by 0644 GMT, after earlier rising as high as US$1,294.
It dropped 0.7 per cent on Monday.
US gold was down 0.4 per cent at US$1,286.50.
"Should the UK exit poll show the 'Remain' camp maintaining its edge, we suspect that global equities will likely continue to do better over the course of the next two days," said INTL FCStone analyst Edward Meir.
"This will likely continue to pressure gold unless the UK vote tightens once again." A vote on June 23 by Britain to leave the 28-member EU, dubbed "Brexit," could tip Europe back into recession, putting more pressure on the global economy and thereby boosting the safe-haven appeal of gold.
Spot gold may drop into a range of US$1,275-US$1,280 per ounce, as suggested by a wedge and a Fibonacci projection analysis, Reuters technical analyst Wang Tao said.
"We think that gold is under short-term volatility, but longer-term factors driving the gold demand are still intact,"said Richard Xu, fund manager of China's top gold exchange-traded fund (ETF) HuaAn Gold.
"We think that gold could be a very good buying opportunity if it pulls back a little bit," Mr Xu said.
Asian shares rose after a tentative start on Tuesday, while the British pound set a three-week high against the dollar.
Federal Reserve Chair Janet Yellen's testimony before the Senate Banking Committee starts later on Tuesday, and she may offer clues on the timing of the next US interest rate hike.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.10 per cent to 908.77 tonnes on Monday, the highest since September 2013.
Among other precious metals, silver fell 0.4 per cent to US$17.41 an ounce.
Platinum and palladium rose after registering on Monday their biggest one-day gains since June 3.