Data from China, a major consumer of silver and the second-largest consumer of gold, showed inflation picked up more than expected in April, while industrial output slowed.
The dollar pared earlier losses and rose against the euro, which came under pressure from mounting worries about how European officials will solve the debt problems of Greece and Portugal.
Spot gold fell 0.4 percent to $1,508.54 an ounce by 1338 GMT, leaving the price on course for a 1 percent rise this week, while COMEX gold futures for June delivery were down 0.5 percent at $1,509.60.
"We had Chinese inflation numbers this morning ... which helped alleviate some of the risk of further monetary policy tightening in China, but as far as gold is concerned, it's still trading with the broader market," said VTB Capital analyst Andrey Kryuchenkov, adding that the rebound in the dollar against a basket of currencies had exacerbated the decline.
Brent crude oil fell 1.2 percent to $116.20 a barrel, off an intraday high of $118.43, while London Metal Exchange copper fell 2.4 percent to $8,700 a ton.
BOOST FROM CHINA
Earlier, gold benefited after data showed high inflation and slowing growth in the world's second-largest economy, which could increase demand for bullion in its capacity as a hedge against rising price pressures.
"Inflation remains above the government's desired target. Although it's not accelerating, it's nevertheless above target," said Standard Chartered analyst Daniel Smith.
"The macro data is a little bit on the weaker side if you look at industrial production and fixed-asset investment, which came in broadly in line with expectations, but it's not roaring away. So it's a picture of still slowing growth and high inflation, so in that sense it's more favorable for precious metals than say base metals," he said.
Real interest rates, with the rate of inflation factored into a central bank's benchmark rate, are at about 1 percent in China, compared with -2.45 percent in the United States, -1.55 percent in the euro zone and an average of -0.4 percent across the G20.
An effective negative interest rate helps gold, which pays no interest rate or dividend of its own, compete with yield-bearing assets for investor cash.
China's inflation in April was stronger than expected at 5.3 percent on the year, while industrial output was considerably weaker than forecast.
"Gold is generally benefiting from the return of confidence from investors," said Darren Heathcote, head of trading at Investec Australia. "They are very happy buying on the dip, as we see the same old problems hanging around."
Growing concern over Greece's fiscal status, dollar weakness and high oil prices continue to fuel nervousness in the financial markets, driving investors to seek safe haven in bullion.
But this has not translated into hefty inflows of metal into exchange-traded funds, at least not yet. Global gold ETF holdings are at their lowest for the year, around 64.322 million ounces, having declined by nearly 10 percent in the past week alone.
Holdings of metal in the iShares Silver Trust, the world's largest silver-backed ETF, rose to a one-week high of 10,585.99 tons by May 10, reflecting some of the bargain-hunting that has taken place since the price hit its lowest in over two months.
Spot silver reversed course and fell 3.1 percent to $37.26, having risen earlier by as much as 2.7 percent to $39.48, falling after three straight days of gains. COMEX silver fell 3.4 percent to $37.17.
The gold/silver ratio -- the number of ounces of silver needed to buy one ounce of gold -- has risen for four consecutive days, indicating gold's outperformance over silver.
Platinum group metals fell in line with the rest of the commodities complex. Spot platinum fell 0.7 percent to $1,780.49, while palladium fell 1.0 percent to $716.05.
(Additional reporting by Rujun Shen in Singapore; Editing by Jane Baird)
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