Gold clawed back above $US941 an ounce on Tuesday, helped by a retreat in the US dollar as stock markets extended gains at the end of the first half of the year.
A weaker US dollar is supportive for bullion as investors view gold as insurance against the falling value of their dollar-denominated portfolios.
"In the past few days equities markets were stable and the US Dow recovered again yesterday. That is related to the half-year ending," said Dick Poon, manager of precious metals at Heraeus Ltd in Hong Kong.
"Gains in equities put pressure on the dollar, which as a result is a plus for gold," he said.
Spot gold was at $US941.20 per ounce, up 0.4 per cent from New York's notional close of $US937.05.
US gold futures for August delivery edged higher to $US941.90 per ounce, up 0.1 per cent from the previous settlement on the COMEX division of the New York Mercantile Exchange.
Gold was on track to lose almost 4 per cent this month, but was poised to rise about 7 per cent for the first half of the year as a fall in US Treasuries prices has increased the appeal of the precious metal.
Spot gold was still off Monday's high, showing that momentum has been tamed after last week's rally, which had pushed the price of gold to a two-week high of $US948.20.
Whether the US dollar would remain weak into the second half was still unclear, and investors were looking for initial trading cues from the monthly US jobs report due on Thursday.
Investors also refrained from building large positions due to a holiday-shortened week in North America. US markets will be closed for Independence Day on Friday, while Canadian markets are shut on Wednesday for Canada Day.
"Gold cleared above $US941 as the dollar weakened versus the euro in Tokyo, but has since been moving sideways," said Kaname Gokon, deputy general manager at Okato Shoji Co's research section.
"It seems to be consolidating in a range of between $US935 and $US948 for now," he said.
Reflecting gold's limited upside potential curbing investor appetite, the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings remained at 1125.74 tonnes as of June 29, unchanged since June 25.
The holdings were down 0.7 per cent from a record high marked in early June.
Reuters
