Gold fell for a second day on Wednesday as gains in U.S. equities and dearth of new developments from conflicts in Ukraine and the Middle East prompted investors take profits.
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Sluggish physical demand in Asia in the seasonally quiet summer period is also weakening support for any price rally, dealers said.
Spot gold has traded within its narrowest monthly range in nearly five years so far in July, as strong equity markets divert investment interest from gold.
Bullion prices initially rose on worries about geopolitical tensions, but later gave up those gains and found support at its 100-day moving average, an important threshold for technical traders, near $1,303 an ounce.
James Steel, chief precious metals analyst at HSBC, said that gold prices in the near term will likely be technically driven because of a lack of U.S. economic news releases and the summer doldrums when many traders are on vacation.
"Gold prices may remain on the defensive in the near-term and a break below the 100-day moving average for gold may introduce selling by momentum investors," said Steel.
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Spot gold was down 0.2 percent at $1,304.55 an ounce by 3:22 p.m. EDT (1922 GMT).
U.S. COMEX gold futures for August delivery settled down $1.60 an ounce at $1,304.70, with trading volume about 30 percent below its 30-day average, preliminary Reuters data showed.
Among other precious metals, spot silver was unchanged from Tuesday's close at $20.88 an ounce. Spot platinum slipped 0.2 percent to $1,476.20 an ounce, while spot palladium was down 0.2 percent at $868.43 an ounce.
Data released on Tuesday showed palladium shipments from top producer Russia to Switzerland, a major refining and trading hub, dropped in June after rising sharply in the previous two months.
Barclays Capital said in a note that it does not expect a return to the consistently elevated shipments of most of the past decade, as the U.K. bank still expects a sizable deficit for the palladium market and Russian state stock releases to be limited.
Palladium prices hit 13-year highs this month, in part due to concerns that supply of the metal from Russia may be threatened by its stand-off with the West over Ukraine.
(By Frank Tang and Jan Harvey; Additional reporting by A. Ananthalakshmi; editing by Alden Bentley)