Gold fell early on Wednesday on gains in US equities and fresh outflows from bullion-backed exchange-traded funds, while traders awaited further cues from the minutes of the US Federal Reserve's latest policy meeting. Worries over Ukraine, as well as technical momentum after a break above $1,300, had helped lift gold nearly 1 percent on Tuesday, but uncertainty over US monetary policy and weak physical and investment appetite curbed that rally.
The Federal Reserve is due to release minutes from its policy meeting held on March 19, when Fed Chair Janet Yellen said the US central bank will probably end its massive bond-buying program this fall and could start raising interest rates around six months later. The precious metal came under pressure with US equities, measured by the S&P 500 index, rising for a second day.
"Attention is diverted towards the equity markets and metals are currently cruising in the background. It seems all the capital markets are lacking a defined trend at the moment and the precious metals are no different," TD Securities traders said in a note. Spot gold was down 0.3 percent at $1,304.89 an ounce by 12:40 pm EDT (1640 GMT).
US COMEX gold futures for June delivery were down $3.70 an ounce at $1,305. Bullion prices have pulled back sharply from a six-month high near $1,400 an ounce in mid-March as geopolitical tensions eased after Russia officials said the country had no intention to invade other parts of Ukraine outside of Crimea.
Physical gold funds showed further outflows, with holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, falling 2.7 tonnes to 806.48 tonnes on Tuesday. That reduced its net inflow for the year to 8 tonnes. The fund has not seen any fresh inflows since March 24. Among other precious metals, silver was down 1.4 percent at $19.72 an ounce, while platinum was down 0.1 percent at $1,432.10 an ounce and palladium was up 1 percent at $779.72 an ounce.