Gold prices fell modestly in European morning trade on Wednesday, but remained supported close to the prior session's three-month high amid growing concerns over political risks in Europe and economic uncertainty in the U.S.

Gold for April delivery on the Comex division of the New York Mercantile Exchange shed $2.70, or about 0.2%, to $1,233.35 a troy ounce by 3:00AM ET (08:00GMT), after gaining $4.00, or 0.3%, a day earlier.

Prices of the yellow metal touched $1,237.50 on Tuesday, the highest since November 11.

Investors were largely focused on French politics, with recent opinion polls showing centrist Emmanuel Macron slightly ahead of conservative Francois Fillon in the first round, but behind far-right National Front leader Marine Le Pen. She has vowed to pull France out of the euro zone and hold a vote on its membership in the European Union.

The first round of the election is scheduled for April 23, followed by the final run-off vote on May 7.

Adding to the mood of uncertainty, elections will also be held in the Netherlands in March, Germany in September and possibly Italy.

Traders also eyed political risk elements in the U.S., with President Donald Trump's administration on the back foot over its immigration and other policies.

Headlines from Washington will continue to dictate market sentiment as traders focus on Trump for further details on his promises of tax reform, infrastructure spending and deregulation as well as trade policies.

Investors often buy gold as a refuge against economic and political uncertainty.

Gains were limited due to a stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% at 100.55 in early trade, pulling away from last week's two-month low of 99.19.

Market participants continued to speculate over the timing of the next U.S. rate increase. Fed fund futures priced in a less than 10% chance of a hike in March, according to Investing.com’s Fed Rate Monitor Tool. However, odds of a June increase was seen at around 60%.

The Fed, which raised rates in December, has forecast three rate increases this year. However, traders remained unconvinced, with markets continuing to price in just two rate hikes during the course of this year.

Fed Chair Janet Yellen will present the U.S. central bank's semiannual report on monetary policy and the economy in testimony to the Senate Banking Committee on February 14, the panel said on Tuesday.

Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.