Gold tumbled from an 11-week high on Thursday as the dollar gained and investors booked profits, but rising tensions over military escalation in Syria prevented further losses. Snapping a four-day winning streak, spot gold fell 1 percent to $1,338.71 an ounce by 1400 GMT while US gold futures dropped 1.2 percent to $1,343.80.
The dollar index gained 0.4 percent, dragging down commodities priced in the US currency. "It's looking like profit-taking," said ING commodities strategist Oliver Nugent, adding that support from geopolitical tensions was not enough to bring gold back above $1,350.
Underpinning bullion was news that British ministers planned to gather on Thursday to discuss whether to join the United States and France in possible military action in Syria that could bring direct confrontation between Western and Russian forces. US President Donald Trump on Wednesday warned Russia of imminent military action in Syria over a suspected gas attack, declaring that missiles "will be coming" and lambasting Moscow for standing by Syrian President Bashar al-Assad.
Gold is often used as a store of value during times of financial or political uncertainty, generally gaining along with assets such as the Japanese yen and US Treasuries.
"Expectations are that $1,350 will act as an initial pivot point for near-term pricing," said MKS SA precious metals trader Sam Laughlin. "However, more importantly, key downside support around $1,335 to $1,340 should provide a base for a further test through the January high of $1,366."
Also supporting gold were lingering worries about a trade war between China and the United States. The US economy was displaying signs of strength, minutes from the last Federal Reserve meeting showed on Wednesday, increasing the likelihood of higher interest rates.
A tightening in US monetary policy dents the investment appeal of gold because the metal pays no interest. Among other precious metals, silver fell 0.8 percent to $16.50 an ounce after hitting its highest in nearly two months at $16.87 in the previous session.
Platinum added 0.5 percent to $930.80 and palladium fell 1.4 percent to $951.10. Palladium, however, has surged by more than 6 percent this week on concerns that supply from top producer Russia could be hurt by sanctions imposed by the United States.
US sanctions were likely an initial trigger for a price rally, UBS said in a note, but the expected recovery in palladium was still supported by strong fundamentals.