Gold takes a breather

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Gold takes a breather

Gold prices fell below $US920 an ounce on Tuesday, taking a breather after solid gains in US equities on optimism about upcoming corporate earnings helped bullion rally above that level a day earlier.

Physical buying limited declines, but a lack of demand for hedging against inflation or other investments curbed further buying, traders said.

Concerns about economic recovery prospects have been weighing on oil prices and supporting the dollar, instead of gold, as a safe-haven asset.

"We see physical buying below $US910, but when it reaches around $US920, the buying is all gone," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"The investment side is still on the sidelines," he said, adding that the gold market is likely to be caught in a range of between $US905 and $US925 for some time.

Spot gold fell to $918.45 an ounce in Asian trade. That was down 0.2 per cent from New York's notional close of $US920.00 on Monday, when it rose as high as $US923.10, the highest since July 8.

It hit a two-month low of $US905.80 last week.

The yellow metal was pressured by worries over the global economy and broad-based weakness in commodities that was fuelled partly by US regulatory pressure to limit speculation in energy and metals markets.

US gold futures for August delivery fell 0.4 per cent to $US918.50 an ounce after rising $US10, or 1.1 per cent, on the COMEX division of the New York Mercantile Exchange on Monday.

The currency market failed to give gold clear directional clues. On Monday, the euro gained ground versus the US dollar as positive comments from a bank analyst helped boost hopes that earnings of US financial companies may not be as weak as initially feared, and lifted global equities.

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