Gold edged lower on Thursday, following a sharp rise in the last session, as investors squared positions to focus on whether US Federal Reserve Chairman Jerome Powell signals a change in monetary strategy.
Spot gold was down 0.4% to $1,946.08 per ounce by 0758 GMT, after rising 1.3% on Wednesday. U.S. gold futures inched up by 0.1% to $1,954.50.
"It was a pretty significant rally overnight on pretty limited news. The thinner Asian trading session has seen punters pull profits," said IG Markets analyst Kyle Rodda.
"Gold bulls will be hoping, in a way, that the stars align a bit: that Powell outlines the Fed's pivot to inflation targeting, and expresses an openness to keep long term rates low, ideally through a new yield-curve control program."
Powell is set to address the Fed's annual central bankers' conference at 1310 GMT, with investors looking for cues on inflation and monetary strategy.
The Fed has slashed interest rates to near zero and rolled out unprecedented stimulus to revive the coronavirus-hit economy, contributing to gold's 28% climb so far this year.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
"Gold should find willing buyers on dips to $1,935 an ounce. Overall, we expect gold to trade in a choppy $1,935-$1,970 range ahead of Powell's speech," said Jeffrey Halley, a senior market analyst at OANDA.
The dollar index touched a near one-week low, while caution crept into global equities markets on fears of fresh U.S.-China tension after Washington blacklisted 24 Chinese companies and Beijing reportedly test fired missiles into the South China Sea.
Elsewhere, silver was down by 0.4% to $27.41 per ounce and palladium dropped 0.9% to $2,178.90, while platinum rose 0.6% to $934.60 per ounce.