Gold was driven lower on Tuesday by a stronger U.S. dollar after hitting its highest price this year overnight, though scepticism over whether a resolution to Greece's debt crisis has been reached limited the decline.
"Gold is still a good buy and that's being made evident by its resilience in the face of a rising dollar," said Eagle Research analyst Keith Goode. The euro huddled near one-year lows as concerns grew on whether a rescue package for debt-stricken Greece will work.
The dollar also hovered near 8-1/2-month highs against the yen, boosted by robust data that backed views that the Federal Reserve will be ahead of Europe and Japan in raising interest rates this year.
"The euro is heading towards lower lows," said John Horner, currency strategist at Deutsche Bank.
Bullion dealers said weakness in the euro could provide gold with another lift in more active European trading later on Tuesday following a holiday in Britain on Monday.
Spot gold [GCC1 1179.2001 -3.4999 (-0.3%) ] was quoted at $1,181.45 an ounce versus Monday's notional close of $1,183.30. Intraday trading on Monday saw spot bullion climb to a 2010 high of $1,187.41 an ounce.
U.S. June gold futures [GCM0 1179.9 -3.40 (-0.29%) ] dipped to $1,182.40 an ounce against a close of $1,183.30.
Gold lost some of its shine after U.S. stocks on Monday staged a broad rally that drove the S&P 500 to its best day in two months. Positive U.S. manufacturing, consumer spending and construction data instilled confidence that the economic recovery was gaining traction.
In gold equity markets, Canada's Yamana Gold reported a 62 percent rise in first-quarter revenue on higher gold prices and rising production.
Also, Australia's top gold miner, Newcrest Mining, won over takeover target Lihir gold with a sweetened $8.5 billion takeover offer to create the world's fourth-largest gold producer.
In other precious metals, platinum [XPT=X 1720.0 --- UNCH ] gained $2 over the New York close to $1,726.00, while palladium [XPD=X 540.5 1.50 (+0.28%) ] dropped $10 to $541.50 an ounce.
Platinum found support from data showing year-on-year U.S. auto sales rose in April. Platinum is a key ingredient in vehicle catalytic converters needed to control emissions.
