Spot gold slipped by 0.4 per cent to $ 1,421.06 an ounce by 1009 GMT. Prices had jumped about 1.5 per cent in the previous session and extended gains early on Thursday to hit $ 1,426.80, gold’s highest since July 3.
Bullion had firmed on Wednesday after the Fed reported that the US economy has continued to grow at a “modest” rate in recent weeks.
“At the moment, gold lacks a trigger to move beyond the levels we have seen earlier this year,” said Julius Baer analyst Carsten Menke, adding that prices between $ 1,420 and 1,425 are attracting profit-taking.
Menke said much attention is focused on the US central bank and that there is “a little bit of disappointment potential” for gold bulls who jumped too strongly on expectations for cuts to interest rates.
Increased bets on a Fed rate cut have kept gold well supported above $ 1,400 and overall momentum is positive, analysts said.
The Fed is widely expected to cut a total of 75 basis points by the end of the year.
Gold approached key resistance around $ 1,430 and short-term trading investors are taking advantage of gains, said Michael McCarthy, chief market strategist at CMC Markets.
Global stock markets, meanwhile, found little relief as the trade tussle between the United States and China rumbles on, helping to support gold.
US President Donald Trump kept up pressure on Beijing this week with a threat to put tariffs on another $ 325 billion of Chinese goods.
Bullion prices could climb to $ 1,439 an ounce after clearing resistance at $ 1,421, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver rose 0.6 per cent to $ 16.07, exceeding the $ 16 mark for the first time since February. Spot platinum was up 1 per cent at $ 851.58 while palladium dipped 0.6 per cent to $ 1,529.08.