Spot gold inched up 0.2 percent to US$1,601.19 an ounce by 0316 GMT, after falling to as low as US$1,594.10 on Tuesday
Gold edged up on Wednesday, after dropping to a 1-1/2-week low in the previous session on promising US retail sales data that dampened hopes for further stimulus measures from the Federal Reserve.
But a darkened euro zone economic outlook added pressure on the European Central Bank to act soon to prevent the economy from sliding further, putting a cushion under bullion prices.
US retail sales rose in July for the first time in four months as demand climbed for goods ranging from cars to electronics. The recovery in consumer spending, a pillar of the US economy, could drive faster economic growth in the third quarter, casting doubt on the necessity of another round of bond buying by the Fed, known as QE3.
"The good news for economy is bad news for gold," said Yuichi Ikemizu, head of commodity trading, Japan, Standard Bank, adding that the lack of clarity on monetary policy direction will keep interest in trading gold muted.
"Gold is unlikely to move out of the current range until end of August or even September."
Investors are eyeing the Fed symposium at the end of August, as well as the central bank's policy meeting in mid-September, for clues on the Fed's stance on QE3.
Spot gold inched up 0.2 percent to US$1,601.19 an ounce by 0316 GMT, after falling to as low as US$1,594.10 on Tuesday, its lowest since August 3.
US gold futures contract for December delivery gained 0.1 percent to US$1,604.10.
Technical analysis suggested that spot gold could fall to US$1,584.49 an ounce during the day, said Reuters market analyst Wang Tao.
The euro zone economy shrank in the second half, despite better-than-expected performance in German and French economies, demanding actions from policy makers.
Investors are still waiting for the European Central Bank to resume its bond-buying programme, after the bank's chief Mario Draghi last month vowed to do everything possible to hold the euro zone together.
Rampant cash printing by central banks stokes inflation outlook and drives investors to bullion, which is seen as an effective hedge against rising prices.
Investor interest in exchange-traded gold funds improved, with holdings of the funds rising to the highest level in nearly a month on Tuesday, at 2,190.583 tonnes.
Holdings of SPDR Gold Trust, the world's top gold ETF, remained unchanged at 1,258.148 tonnes, highest since mid-July.
But the number was 2.7 percent lower than this year's high hit in late February.
Prominent hedge fund manager John Paulson raised his stake in the fund in the second quarter of 2012, but Eton Park dissolved all of its 9,989 shares, a US regulatory filing showed on Tuesday.
Supply disruption at the South African operations of the world's No.3 platinum producer Lonmin helped prices of platinum to extend gains into a second day. The metal was up 0.7 percent at US$1,400.74.