Spot gold touched its highest since mid-June at $1,298.42, but was down 0.2 percent at $1,291.31 per ounce as of 1130 GMT.
US gold futures were down 0.1 percent at $1,293.40 per ounce, having risen above $1,300 earlier in the session.
"Gold is looking slightly overbought at the moment, so there's a degree of caution," said Ross Norman, chief executive at Sharps Pixley.
"Gold has done a lot of work already and we suspect that the market will now sit back and see what the data shows us this afternoon."
Markets are awaiting a December US payrolls report later in the day and a discussion between US Federal Reserve Chair Jerome Powell and former Fed chairs Janet Yellen and Ben Bernanke for clues on any further interest rate increases.
Rising rates lift the opportunity cost of holding non-yielding bullion.
"A weaker dollar and low-risk environment are both proving to be very bullish factors for gold but I feel we may have seen some profit-taking as we near the next big round number," said Craig Erlam, senior market analyst at OANDA.
"I don't see that lasting long though as the risk environment isn't really improving and the dollar continues to look weak."
The dollar slipped while stock markets found respite after dismal Chinese manufacturing data, on news that China and the United States will hold ministerial talks in Beijing next week to seek to end their trade war, which has impaired their economies.
"The news on Sino-US trade talks is good for both the US and China as the trade tension had taken a toll on all economic data," said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade Ltd.
A survey from the Institute for Supply Management on Thursday also pointed towards slowing factory activity in the United States, hinting at injuries to economic growth.
Gold is traditionally considered a safe investment during times of uncertainty.
Indicating investor appetite for gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to 795.31 tonnes, their highest since early August, earlier this week.
Silver eased 0.1 percent to $15.72 per ounce, having hit $15.87, its highest since mid-July.
Platinum eased 0.2 percent to $796.99 and palladium rose 0.1 percent to $1,265.