Gold rebounded from early losses on Wednesday to a one-month high on safe-haven buying after US manufacturing data for May came in well below forecasts and below the robust April reading.
The worrisome data from the Institute for Supply Management followed an early report on US private-sector jobs, which cast doubt on the health of the world's largest economy and undermined the dollar.
Spot gold was trading at $1,546 an ounce at 12:55 pm EDT (1655 GMT) after earlier hitting $1,550.14, its highest since May 3. Benchmark August COMEX futures was at $1,547 after earlier hitting its highest since May 2 at $1,551.60.
US factory activity growth slowed in May to its lowest level since September 2009, suggesting a loss of momentum in the economy in the second quarter.
"The various elements involved are stepping back a bit from the brink again and that, you would expect to take a little bit of the edge off gold for sure, but at the same time, it's seen the euro come back against the dollar and that is benefiting gold," said Credit Suisse analyst Tom Kendall.
Gold fell by about 2 percent in May, although the price remained on track for a near 8 percent gain this year, fuelled in large part by investor nerves over the eurozone's finances.
The price of gold in euros hit a life-time high of 1,088.11 euros an ounce last week and a record high in dollars of $1,575.79 an ounce in early May, just before a major sell-off across the commodities complex.
Investor demand for gold retreated in May, as reflected in the net outflow of metal from global exchange-traded funds, which fell nearly 1 percent last month in their first monthly decline since February.
Mexico's central bank moderately expanded its gold holdings in April, buying 190,000 ounces of gold, worth nearly $282 million based on average spot price of the month, after buying more than $4 billion in bullion in March.
Spot silver was lower at $38.19 an ounce than $38.44 at Tuesday's close. US July silver futures fell 1 percent to $37.95, after falling over 20 percent in May.
The London Bullion Market Association said it would launch a silver forward price curve following the launch of its gold forward price curve in January.
Palladium rose to $781 an ounce from $774.10 an ounce on Tuesday, and platinum fell to $1,825.49 compared with $1,828.10 the day before.
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