Gold fell more than 1%, defying a rebound in oil prices, after the US dollar bounced against the euro and speculators in Japan shifted some of their money back to stocks.
Investors await a series of economic data due out this week, including US non-farm payrolls numbers on Friday, and interest rate decisions from central banks, which could give direction to the dollar and precious metals.
Gold was trading at $US776.90 an ounce, down $US4.60 from New York's notional close. It fell as low as $US772.10 on Wednesday, not far from a near two-week low of $US761.30 hit the previous day.
Bullion has rebounded around 14% since falling to a 13-month low of $US680.80 in October, but the upside was capped by recent weakness in oil, a firm dollar and worries about an increasingly bleak global economic outlook that could curb investors' appetite for risky assets.
The US job data will be released and many people expect it to be very bad. The bear trend will continue for spot gold,'' said Kazuhito Saito of Interes Capital Management in Tokyo, adding that some Japanese investors sold gold to buy stocks.
"It may fall below $US750,'' said Saito, referring to the current support level and the 30-day moving average.
US payrolls probably shed 316,000 jobs in November, following October's drop of 240,000 jobs, according to economists polled by Reuters. The unemployment rate is seen rising to 6.8% in November from October's 6.5%.
The Nikkei rose 1% after tumbling to a near two-week low the day before.. Oil rose more than $US1 a barrel on a technical rebound.
The euro slipped to $US1.2695 in thin trade ahead of interest rate decisions from the European Central Bank, the Bank of England and the Reserve Bank of New Zealand on Thursday.
A Reuters survey showed prices of platinum, palladium and silver, which have significant industrial uses, are expected to slump next year as demand sags in line with economic growth.
But gold should fare better than the industrial precious metals as investors buy bullion as a haven from risk, especially if the dollar recovery loses traction. A poll of a dozen analysts showed 2009 gold forecasts down just 9%.
Platinum was trading at $US794.00 an ounce, down $US2.00 from New York notional close. It has fallen lost more than 60% since hitting record of $US2,290 in March to track weaker gold and recently, dismal auto sales and recession fears.
"The problems with General Motors are a big headache for people in the platinum market,'' said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
"It's a very bearish market,'' said Sonoda, adding that weak oil also weighed on platinum.
A top lawmaker predicted Washington would approve a bailout for US automakers after they submitted survival plans, and General Motors Corp and Chrysler LLC said they needed an immediate infusion of cash to avoid failures.
That said, US auto sales fell for the 13th consecutive month in November, led by a 47% sales drop at Chrysler and a 41% decline at General Motors, and major automakers said there was no sign that demand would rebound in the next six months in the world's largest vehicle market.
More than 60% of global platinum use goes to autocatalysts to clean exhaust fumes.
New York gold futures fell $US4.6 an ounce to $US778.7 in electronic trade.
