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Spot gold was little changed at $1,284.74 per ounce by 0345 GMT, while U.S. gold futures were up 0.1 percent at $1,284.20 per ounce.

Spot gold rose 0.4 percent on Tuesday as global stock markets fell. Asian stocks dipped further on Wednesday.

·       "Macro fundamentals data has been pretty disappointing ... There is a sudden surge in absurdities surrounding the U.S.- China trade talks. All this data and trade uncertainties is fuelling demand for safety," said Margaret Yang, market analyst at CMC Markets.

However, a lack of significant movement in Asian equities was limiting gold's gains, Yang added.

Gold is often used as a hedge against political and economic uncertainty.

"As the risk sentiment is biased towards the bearish side, based on all this data, gold will have more room to go up and potentially challenge the resistance of $1,290-$1,295," Yang said.

·       Disappointing economic data from the United States and Japan added to the sense of an overall slowdown. U.S. home sales tumbled to their lowest in three years in December, data on Tuesday showed. Meanwhile, Japan export data released on Wednesday fell short of expectations.

·       Additionally, the Financial Times said that the United States rejected a Chinese offer for preparatory trade talks this week ahead of high-level negotiations scheduled for next week. White House economic adviser Larry Kudlow denied the report.

·       Also supporting gold was a prolonged partial U.S. government shutdown and expectations that the Federal Reserve will hold its multi-year rate hike cycle, analysts said.

Political uncertainty remains high, with Prime Minister Theresa May's Brexit deal still struggling to find support, aiding gold, ANZ analysts said in a research note.

·       Reflecting investors' appetite for gold, holdings of the SPDR Gold exchange-traded fund (ETF), the largest gold-based ETF, was at its highest since June2018.

·       Spot gold may break a support at $1,279 per ounce and fall to the next support at $1,268, as suggested by its wave pattern, a projection analysis and a rising trendline, according to Reuters technical analyst Wang Tao.

·       Gold is struggling to beat key hurdle despite the signs of bullish exhaustion in the dollar index - gold's biggest nemesis.

The downward sloping (bearish) 100-hour moving average (MA), currently at $1,285.66, is putting brakes on the recovery rally.

Looking forward, the yellow metal could rise well above the 100-hour MA. The outlook, however, would turn bullish only above $1,300. Moreover, the bearish view put forward by Friday's range breakdown is still intact.