Euro zone industrial new orders rose more than expected in November, confirming the strength of recovery in industry in the economic union.

The improved economic data, combined with speculation that the European central bank might raise interest rates, pushed the euro to a two-month high. The single currency held near the peak on Tuesday.

"The gold market is a bit negative for the time being," said Ronald Leung, a physical trader at Lee Cheong Gold Dealers, adding that speculation on more tightening moves from China before the Lunar New Year holiday also adds to the bearish sentiment.

"But on the physical side, people are still buying. There doesn't seem to enough supply in the physical market."

Spot gold fell below $1,330 for the first time in about ten weeks, and was trading in a range of about $20. It recovered to $1,332.45 an ounce by 0315 GMT, but remains on course for a fourth consecutive day of decline.

The Relative Strength Index fell to 32.718, its lowest since late October 2008.

U.S. gold futures fell nearly one percent to $1,332.1.

A bearish target at $1,322 per ounce remains unchanged for spot gold, based on its wave pattern and a triangle pattern, said Wang Tao, a Reuters market analyst.

"I don't see prices drop much further, as the strong physical demand is supportive. But around the Chinese New Year, market in Asia will be a bit quiet," said a Hong Kong-based dealer.

The strong hold for gold prices would be around $1,320, he added.

This year's Lunar New Year falls on Feb 3. China, a key player in the region's gold market, kicks off a week-long holiday on Feb 2.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 10.926 tons, its biggest one-day loss since early October, to 1,260.843 tons by Jan 24.

Spot silver fell to $26.64 an ounce, its lowest in nearly two months. It was trading at $26.77, down half a percent. The RSI fell to 33.271, its lowest since early February last year.

Holdings in the iShares Silver Trust gained 0.8 percent to 10,478.08 tons, off an 11-week low of 10,394.53 tons on Jan 21