Gold slid more than 1% on Tuesday as China's steps to mitigate the economic impact of the coronavirus epidemic drove some investors away from safe havens and back into riskier assets. Spot gold fell 1.61 % to $1,550.69 per ounce by 1:40 p.m. EST (1840 GMT), after hitting its lowest since January 21 at $1,548.70. US gold futures settled down 1.7% at $1,555.50.
"The dramatic move in global equity markets, especially in the US markets, clearly indicates there is lesser concern about coronavirus denting GDP and we have a lesser need for safe havens," said David Meger, director of metals trading at High Ridge Futures.
Wall Street built on a recovery in world stocks as fresh intervention by China's central bank calmed investor nerves.
Beijing's efforts included signing off on more government spending, tax relief and subsidies for virus-hit sectors, policy sources said.
The outbreak has undermined the country's economic activity as cities are locked down, with travel restrictions and businesses closed.
Nevertheless, some uncertainty remained about the extent of the impact on the Chinese and global economies.
"In case the impact of the virus is less than the market has priced in, it could lead to a correction in gold prices, but as long as we don't see economic growth accelerate, gold prices will remain supported," said Quantitative Commodity Research analyst Peter Fertig.
Some traders have also started to price in a cut to US interest rates by June.
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.
Gold should stay within a range of $1,550 to $1,600 an ounce ahead of more political and economic headlines, George Gero, managing director at RBC Wealth Management, said in a note.
On the economic front, new orders for US-made goods rose 1.8% in December, beating analysts' consensus forecast of a 1.2% gain.
India's gold imports in January plunged 48% from a year earlier as a rally in local prices near record highs prompted buyers to curtail purchases, a government source said.
Elsewhere, palladium gained 4.5% to $2,423.76, after touching its highest since January 24 at $2,435. Silver fell 0.5% to $17.57, while platinum dipped 0.4%, to $962.83.