By Clara Denina
LONDON (Reuters) - Gold pared earlier losses on Wednesday after mixed U.S. economic data but stayed close to a 5-month low on uncertainty over when the Federal Reserve will exit its asset purchase scheme.
The metal has been under pressure as markets believe a recovering economy could prompt the Fed to slow the pace of its $85 billion in monthly bond purchases as soon as December.
Investors realise the central bank will start reducing stimulus at some point but the timing remains open to question.
Spot gold fell one percent to its lowest since July 5 at $1,211.44 an ounce earlier in the session. It cut losses after a series of data and was up 0.3 percent to $1,227.40 by 1506 GMT.
The metal has hit a fresh five-month low in every session this week.
U.S. gold futures rose 0.5 percent to $1,227.70 an ounce, while gold in euros dropped to its lowest since late July 2010 at 891.26 euros an ounce in earlier trade.
"The move down to $1,211 may have prompted some short stops, so there is a bit of short-covering but this jump is not really a rally," Citi analyst David Wilson said.
"And better-than-expected ADP today points to the likelihood of strong nonfarm payrolls... we are all going to watch data on Friday to see what happens."
An ADP jobs report showed U.S. private employers added a chunky 215,000 jobs in November. But the pace of growth in the U.S. services sector slowed last month and the U.S. trade deficit narrowed slightly less than forecast in October.
Data on U.S. gross domestic product on Thursday and the nonfarm payrolls report on Friday will be now closely monitored, ahead of the central bank's next policy meeting on December 17-18.
The Fed's money-printing for bond purchases has played a central role in bolstering gold prices over the past few years, as a low interest rates environment and increased liquidity encouraged investors to put money into the non-interest-bearing assets like bullion.
However, a recovering U.S. economy has prompted talk of an end to stimulus measures and shifting of investor money to equities from gold, usually considered a safe haven in times of financial or geopolitical troubles and a hedge against inflation.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.80 tonnes on Tuesday to their lowest since early 2009 at 841.41 tonnes.
A record outflow of 460 tonnes from the fund this year has helped fuel a 27 percent decline in gold prices so far.
Physical buying, which tends to provide a floor to prices, has failed to pick up in a big way in recent weeks as most consumers had bought a lot more than necessary during earlier price drops this year.
They are now waiting on the sidelines expecting further declines in prices, according to dealers.
"Some opportunistic physical buying could emerge near early July lows, but the overall sentiment will still be driven by U.S. economic expectations," VTB Capital said.
Silver mirrored gold's moves and rose 1.4 percent to $19.37 an ounce. Spot platinum was up 0.4 percent to $1,359.74 an ounce and spot palladium increased 0.5 percent to $716.75 an ounce.
(Editing by Mark Heinrich)