Tokyo - Gold steadied around $1 050 an ounce on Friday after falling more than $10 the previous day as the dollar pared recent losses, prompting the precious metal to consolidate from record highs hit earlier this week.
Gold is often considered as a hedge against the US currency.
Bullion was defensive despite a further decline in the dollar and a rally in oil, and a halt in the actual inflow of funds into gold discouraged further buying. Oil prices had lagged behind recent gains in other commodities, including gold, traders said.
Spot gold was at $1 051.60 per ounce at 5:322, up 0.2% from New York's notional close of $1 049.85.
It hit a record high for two days in a row to reach $1 070.40 on Wednesday. Its low on Thursday was $1 046.20.
US gold futures for December delivery were at $1 052.60 per ounce, up 0.2%, after losing 1.3% in the previous session.
But the recent rally was mainly driven by long positions piling up in gold futures on a weakening dollar.
That showed a stark contrast to its gains at the beginning of October, when investors put new money into gold-backed exchange-traded securities, traders said.
"People seem to be getting tired of buying gold further," said Namoi Suzuki, a senior analyst at SC Asset Management in Tokyo.
"The dollar's outlook is weak, so gold's basic strength will be kept in tact. But it is disappointing that gold has stopped rising in other currencies, which suggests the deterioration of confidence among non-dollar investors," she said.
Bullion denominated in euros hit a seven-month high earlier this week above €720 per ounce before falling to around €704.
Key gold futures contract on the Tokyo Commodity Exchange peaked on Wednesday at ¥3 088 per gram, that was even with an year-to-date high marked in June.
In the currency market, the euro and high-yielding currencies such as the Australian and the New Zealand dollars hit new highs for the year against the dollar after positive US data and encouraging corporate earnings prompted investors to further build long positions, dealers said.
Against a basket of currencies, the US currency has fallen about 7% so far this year.
Underlining lacklustre investor interest at the current high price levels, gold holdings by the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, have been flat since October 7.
Its holdings stood at 1 109.314 tonnes on Thursday, the highest since early July but still off a record high of 1 134.03 tonnes marked on June 1 and 2.
- Reuters