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Gold retreated for a third straight day as investors await a policy review from the European Central Bank amid speculation that President Mario Draghi may unleash yet more stimulus, potentially buoying the dollar.

The yellow metal is still up 17 percent this year after demand for haven assets surged amid volatility in financial markets.

The euro was under pressure, with the ECB expected to cut the deposit rate, announce more asset purchases and possibly introduce tiered interest rates like the Bank of Japan in a bid to boost inflation, according to a Reuters poll.

"We are not overly concerned about the pullback we saw in the past two days, as we think gold's uptrend remains intact as long as the metal closes above $1,246," technical analysts at ScotiaMocatta wrote.

"In our view, gold will likely consolidate here before taking a swing at $1,307," a level last seen in January 2015, they said.

Gold had benefitted from low expectations that the U.S. Federal Reserve would lift interest rates at its policy meeting next week despite a recent raft of robust economic data including last week's forecast-beating employment report.

Reference : Reuters, Bloomberg