Gold was struggling to shake off its longest losing streak in nearly six months as doubts persisted over when the U.S. Federal Reserve would begin scaling back its stimulus measures.
The metal has lost about 3 percent since October 28 and has logged its longest losing run since mid-May, when it dropped 8 percent in seven days. Analysts believe gold could break below the $1,300 mark ahead of the U.S. nonfarm payrolls report on Friday.
The timing of any tapering of the Fed's $85 billion in monthly bond purchases has been a key factor driving gold prices this year. Gold has lost a fifth of its value this year as an improving economy has prompted investors to move to stocks and the Fed to think about cutting back stimulus.
Recent mixed economic data has cast doubts over the exact timing, leaving markets to speculate whether the Fed would announce tapering before year-end.
"The overall sentiment is that the economic recovery is steady but it has lost some steam," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
"Investors are cautious, so I think gold will move towards $1,300 and stay around that for consolidation," To said, adding that tapering would not be implemented anytime soon as unemployment rates were still high.
Spot gold was nearly flat at $1,311.45 an ounce by 0228 GMT on Wednesday.
Trading volumes on Comex gold futures have been very low this week as markets wait for the U.S. nonfarm payroll report on Friday.
Investors are closely watching data as the Fed has tied any stimulus tapering to a strong economic recovery and improvements in the labour market.
"We expect U.S. economic data to continue to have an outsized impact on gold for the near term," HSBC analysts said in a note. "Given the recent string of better-than-expected U.S. economic data, gold may test the $1,300 level ahead of the payrolls report."
On the physical side, demand has failed to pick up robustly despite prices drifting towards the crucial $1,300 mark.
Gold premiums in India halved on Tuesday from last week because of unusually muted demand during the festival season and as supply was set to improve after some importing agencies began purchasing for domestic use.