US gold futures settled up 0.2 percent at $1,284.10 per ounce. "The equity markets turned around. Secondly, the dollar index got very strong; it is testing the 97 level again. Both of these factors are putting pressure on the price of gold," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
"I think gold will have a very good 2019. The dollar will continue to weaken. Even though it's up today, it is just an aberration."
The US benchmark S&P 500 stock index was trading lower but was above the day's trough after dropping as much as 1 percent earlier in the session.
Gold priced in euros jumped to 1,134.08 euros an ounce, its highest level since mid-June 2017. In sterling terms, gold climbed to its highest level since early September 2017, at 1,022.80 pounds an ounce.
"There is some fading optimism for the euro zone area which is giving gold quite a good lift. It is a continuing trend of what we've seen in the latter part of last year," said Ross Norman, chief executive officer of Sharps Pixley.
Spot gold prices gained about 5 percent last month, the most since January 2017. Some investors expect the precious metal to pass the $1,300 psychological resistance level in the near-term.
Markets are now awaiting views from Federal Reserve Chairman Jerome Powell on the US economic outlook and hints about interest rates in 2019 when he participates in a joint discussion on Friday with former Fed heads Janet Yellen and Ben Bernanke.
Among other precious metals, palladium fell 0.5 percent to $1,257.50 an ounce.
Silver gained 0.3 percent to $15.49, having earlier touched its highest since July 31 at $15.61, while platinum rose 0.2 percent to $792.70.