Tokyo - Gold steadied on Friday after three days of losses, but uncertainty about the future of a deal to rescue the US financial system, which had appeared close to an agreement, drove investors to the sidelines.
Spot gold was quoted up at $877.45/879.45 per ounce by 05:06 GMT, up $1.75 compared with the previous nominal close of $875.70.
It wavered narrowly between $872.95 and $882.85.
Prices eased this week since ending on Monday at just above $900, their highest since August 1.
The near-term technical trend weakened slightly after the cash price dipped below the five-day moving average of around $884.
Gold has gained about 20% since September 11 as safe-haven demand heightened, after a collapse in the share price of Lehman Brothers raised questions about the stability of the US and global financial sector.
Negotiations toward a $700bn in bailout plan for Wall Street fell into disarray on Thursday night just as US lawmakers appeared close to a final agreement.
"There is some skepticism as investors wonder if the rescue deal is going to work out," said Koji Suzuki, senior analyst at SBI Futures.
Suzuki also said while gold was attracting attention in its traditional role as a hedge against financial worries, the inverse correlation that typically exists between the precious metal and the dollar or stocks may not no longer be as clear-cut.
The momentum to invest is generally waning, he said.
"The question is who is going to buy ... when you have money flowing out of funds," Suzuki said.
In industry-related news, the US Mint told dealers on Thursday it was again temporarily suspending sales of American Buffalo 24-karat one-ounce bullion coins.
Traders will also be waiting to hear how much gold has been sold so far by the European Central Banks as Friday marks the end of the fourth year of the Central Bank Gold Agreement.
In March 2004, 15 European central banks renewed a 1999 pact to limit their sales over a five-year period to 2 500 tonnes, with annual sales limited to 500 tonnes, up from 2 000 tonnes in the first agreement.
Oil fell more than $1 per barrel to slip under $107 on Friday, reversing the previous session's gains of more than $2, as investors took profit on uncertainty over the US government rescue plan.
The uncertainty over the future of the US plan also dragged the Nikkei average lower as blue-chip exporters fell.
The benchmark Nikkei shed 23.19 points to 11 983.34, after starting the day in positive territory.
The dollar fell against the yen and the euro on Friday as hopes for an imminent deal to rescue the US financial system soured.
Bullion holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at a record 724.94 tonnes as of Wednesday.
The benchmark August gold contract on the Tokyo Commodity Exchange fell, to close the morning down ¥40 per gramme, at ¥2 993.
Platinum was quoted at $1 180/$1 195 per ounce, up from Thursday's nominal close of $1 172.50.
Spot silver was at $13.28/13.36 versus the nominal close of $13.16, while spot palladium was at $238/$244 up from nominal close of $234.
- Reuters