Tokyo - Gold was mostly flat on Tuesday, trading around $950 as the dollar took a break from its rally, improving the precious metal's appeal as a currency hedge.
Bullion neared $1 000 per ounce last week, a key level it last topped in February, as worries about inflation and a weaker US currency increased gold's attraction as an alternative investment.
It hit an 11-month high of $1 005.40 on February 20.
Gold was at $950.55 per ounce at 06:05 GMT, little changed from New York's notional close of $950.05.
"Hedge funds are getting their direction from the currency markets and they have been selling (gold) on the dollar's rally," said Koji Suzuki, a senior analyst at SBI Futures Co Ltd.
"And we find regular investors buying gold as a hedge when the dollar weakens," he said.
Bears say short-term funds are driving up the market, which means that any gains would not last long.
Suzuki said, however, that he believed gold would eventually head towards $1 000 given that there is still some uncertainty about the US economic outlook.
The dollar dipped against the euro on Tuesday, taking a breather after rallying in the wake of last week's US jobs data, which stirred talk that the Federal Reserve may raise interest rates later this year.
The euro rose 0.1% to $1.3920, having regained ground after dropping to $1.3806 on trading platform EBS on Monday, its lowest since late May.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings were steady at 1 132.15 tonnes as of June 8, unchanged from the previous business day. It is still in sight of the record high of 1 134.03 tonnes marked on June 1.
Interest in platinum ETFs remained steady.
The amount of metal ETF Securities holds to back its platinum-backed exchange-traded commodity rose nearly 20 000 ounces or 6.9% in the week to June 5, the company said in a daily report on Monday.
Strong prices have kept physical buyers sidelined.
Buying in India, the world's largest consumer, slowed to a trickle as the wedding season neared an end and buyers waited for domestic prices to fall further.
Gold demand rises in India during the Hindu marriage season as parents buy jewellery as gifts to provide their daughters with some financial security in times of crisis.
- Reuters