Gold prices edged lower on Thursday as investors locked in profits, after the bullion gained nearly 1pc in the previous session on safe-haven buying amid concerns that an historic drop in long-term US bond yields could portend a global recession.
Spot gold was down 0.2pc at $1,512.45 per ounce, as of 0732 GMT. US gold futures slipped 0.3pc to $1,523.
"We are seeing flight to safety, market confidence is a bit shaky. We have been seeing that the economy is showing signs of weakness and it is starting to slow in the second half of this year, which is supportive for gold," said Benjamin Lu, analyst, Phillip Futures.
"On the flip side, gold's bull run is going on for sometime, we are afraid in the short-term there might be some pullback, corrections and people locking in profits, which might create volatility in coming days."
The US yield curve was inverted for a second straight trading session on Thursday. The yield curve inversion, which has historically signalled a looming recession, triggered an extensive flight to safety.
Fears of a global recession gripped financial markets around the world as stocks slumped to more than two-month lows on Thursday, tracking a Wall Street slide.
"We have continued safe-haven buying with stock markets looking pretty wobbly ahead of US retail sales data," OANDA analyst Jeffrey Halley said.
"The US is the last man standing among Europe and China. We could see an outsized reaction overnight if data comes in ugly, which should help gold again."
Economic data from China and Germany suggested a faltering global economy, hit by the worsening US-China trade war, Brexit and geopolitical tensions.
Gold, which pays no interest of its own, is often used as a hedge against political and financial risks.
Markets are anticipating US retail sales data due later in the day, which could serve as an indicator of the strength of the world's largest economy.
On the trade front, senior US officials said on Wednesday that China has made no trade concessions after the United States delayed tariffs on some Chinese imports, the latest sign that the trade saga is going nowhere.
Investors are focused on the Federal Reserve's annual symposium next week. Traders see a 66.3pc chance of a 25 basis-point rate cut by the Fed this September.
Lower US interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.9pc to 844.29 tonnes on Wednesday.
Among other precious metals, silver dipped 0.4pc to $17.15 per ounce.
Platinum gained 0.1pc to $841.50 an ounce and palladium climbed 0.6pc to $1,432.64.
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