Gold prices dipped over 2% to their lowest in a week on Tuesday as the dollar firmed, but the metal was on track for a sixth straight quarterly rise on concerns of global economic damage due to the coronavirus pandemic.
Spot gold fell 2% at $1,588.64 per ounce. U.S. gold futures lost 2.4% to $1,603.60.
"The mood across markets seems to be improving as investors take comfort from the positive economic data from China.
However, a sense of caution still lingers in the air which is stimulating appetite for the dollar," said FXTM analyst Lukman Otunuga.
Investors cheered as strong Chinese factory data held out hope for an economic revival even as much of the rest of the world locked down to fight the coronavirus.
For the quarter, gold has gained 6%, and 1.7% this month, on the back of U.S.-Iran tensions in January and since then the global pandemic.
"Global sentiment remains shaky despite central banks and governments standing together in the fight against COVID-19," Otunuga said, adding "fears revolving around a global recession should send investors rushing towards gold, especially if cracks start showing in the largest economy in the world."
Countries and global central banks have announced several policy measures to combat the economic toll from the coronavirus, which has infected over 777,000 people worldwide and killed 37,561. Russia's central bank announced it would suspend buying gold starting April 1.
Elsewhere, platinum rose 1.5% to $733.69, but was on track to post its biggest quarterly decline since 2008 and worst month since 2015.
"Platinum demand from the automotive industry has been largely paralysed by the corona crisis," Commerzbank analysts said in a note. "The production outages in South Africa will be unable to offset the negative effects on demand, assuming that production– as announced so far – remains restricted for only three weeks."
The world's largest platinum producers Anglo American Platinum, Sibanye-Stillwater and Impala Platinum have declared force majeure on contracts after a three-week national lockdown in South Africa forced operations to close.
Palladium rose 3.2% to $2,402.17 an ounce. The auto-catalyst metal was headed for its biggest quarterly gain since 2010, but was set for its first monthly decline in eight.
Silver rose 0.1% to $14.13, but was set to post its biggest quarterly decline since June 2013.