Gold slipped below a near five-month price peak hit earlier in Tuesday's session, as robust U.S. manufacturing data and higher Treasury yields dented its appeal.

Spot gold was 0.3pc lower at $1,903.15 per ounce at 12:31 p.m. EDT (1631 GMT), after touching its highest since Jan. 8 at $1,916.40. U.S. gold futures were steady at $1,905.20.

"Gold has had a small set back as U.S. equities are continuing to power through, Treasury yields are starting to go up ... and on better manufacturing data," Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said.

Investors might think that the Federal Reserve is going to taper policy faster than anticipated, he added.

Data showed U.S. manufacturing activity picked up in May as pent-up demand boosted orders.

Benchmark U.S. Treasury yields rose to a more than one-week high, increasing the opportunity cost of holding gold.

Global stocks hit a record high as markets shrugged off concerns about rising inflation.

Providing gold support, however, the dollar index shed 0.3pc against rivals, making bullion cheaper for those holding other currencies.

Investors now await key U.S. economic readings, with the main event of U.S. payrolls figures due on Friday.

"The mounting pile of evidence that suggests we have reached peak economic momentum raises the risk that inflation-hedging flows into gold could start drying up," TD Securities said.

"However, if inflation is indeed transitory, then we're likely to see a prolonged period of uber-easy monetary policy, which suggests that market pricing for Fed hikes is too hawkish and ultimately that gold prices could firm further," it added in a note to clients.

Among other precious metals, silver was steady at $28.04 per ounce. Palladium rose 0.2pc to $2,834.68, while platinum gained 0.8pc to $1,196.