By Arijit Bose and Sumita Layek

Spot gold was down 0.1 percent at $1,280.81 an ounce at 3:20 p.m. EST (2020 GMT), having earlier touched its highest since June 15 at $1,288.66.

U.S. 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 U.S. 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. [MKTS/GLOB]

The dollar index <.DXY> rose 0.7 percent against the euro and sterling on Wednesday. [USD/]

Meanwhile, euro zone manufacturing activity barely expanded at the end of 2018 in a broad-based slowdown, while China's factory activity also contracted for the first time in 19 months in December.

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 U.S. 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.

There are expectations that a three-year rate-hiking cycle in the United States has come to a close, which would be beneficial for non-yielding bullion.

Further pointers are expected this week from a closely watched survey on U.S. manufacturing, due on Thursday, followed by the December payrolls report on Friday.

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.

(Reporting by Arijit Bose, Swati Verma and Sumita Layek in Bengaluru; Editing by Susan Thomas, Rosalba O'Brien and Andrea Ricci)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)